Blockchain Papers

Mushfig Jabir Aliyev

The thesis deals with problems facing municipal financing in Azerbaijan. Following the exploration of the options for a better design of local government financing.

Viktória Vásáry, Andrea Elekes, Péter Halmai, Vasary, Viktoria · 6 authors

Can we agree fully with the statement, that “agricultural spending is a major distorting factor in the EU economy and a distinct obstacle to the Lisbon agenda’s implementation”? (Gros, 2008) Is it without question that Europe’s agriculture is in position to become sustainable and competitive without certain kind of common policy with no Community financing? Is it unambiguous in every respect, that the challenges facing the sector – globalization, trade liberalization, climate change, water management, Lisbon process, enlargement, changing preferences – could be answered at national level utilizing exclusively national financial sources? The answers to these questions are complex. So the purpose of the paper is multiple: - Exploration of factors justifying community level intervention. – Could be applied the bottom line of the “decentralization theorem” to budgetary questions and needs of the agricultural policy? According to our hypothesis the answer is considered yes. - Assessing present CAP - taking into account its ability to provide EU wide public goods (multifunctional elements serve in deed significant cross-border externalities) and to create EU value added. - Making an attempt to redefine EU’s agricultural policy through exploring objectives having a greater impact by being implemented at the supranational level and not at other secondary decision levels. – Making an attempt to outline a Common Rural Policy, a policy promoting the provision of public goods required by the society by means of targeted and decoupled economic policy measures. In order to attain the objectives of the paper we apply the theory of fiscal federalism, make analysis on EU public finances in a broader context.

Benjamin Lünenbürger

River floods can be very damaging. Since numerous human responses to floods are possible, the question arises: What is the organization of flood management that leads to the most efficient results? The dissertation first considers flooding and flood management in Germany. Based on that analysis, a theoretical, political-economy model of public flood defense is developed. The basic model is then extended to allow migration between upstream and downstream regions as well as between flood-prone areas and zones without risk. As different flood protection measures have quite different spatial characteristics, the distribution of responsibilities between the different actors is decisive for the overall performance of flood management. The distribution of public responsibilities among the different federal actors is crucial for two reasons. First, there are unidirectional upstream-downstream spillovers that raise the question whether decentralized or centralized provision of public goods is more efficient. Second, benefits from flood protection are concentrated to flood-prone areas near rivers. This concentration creates a natural heterogeneity of preferences for flood defense. These two aspects are also relevant for other issues in water management. Unidirectional spillovers and spatially heterogeneous preferences for public goods challenge the federal organization of flood defense. Following the lead of recent political-economy contributions to fiscal federalism, both aspects are investigated in a two region model with majority voting. Four different decision-making structures are compared: classical decentralization or centralization (based on jurisdictions containing voters both with and without preferences for the public good) and decentralized or centralized single issue authorities (whose jurisdictions, by definition, contain only high preference voters). Decentralized jurisdictions separate upstream and downstream voters, whereas a centralized jurisdiction comprises both groups. It turns out that centralized jurisdictions lead to a very low public good surplus and that either classical decentralization or decentralized single issue authorities achieve the best results under most conditions. The centralized provision of public goods is flawed because there is either an extreme over- or an extreme under-provision of the downstream public good. This can, however, be mitigated if there is a common standard for flood protection or if only the upstream provision of the public good is centralized. Whether or not these two solutions are beneficial depends on the magnitude of spillovers and also on the voting majorities in the two regions. Expanding the model to consider migration led to more complex results. First, citizens can migrate to flood-prone areas. Such migration flows can be induced by too large public flood defense, which is favored if citizens outside of flood-prone areas also finance the public good. Second, migration flow is also influenced by spillovers. The socially efficient population distribution is U-shaped with respect to spillovers. With symmetry assumptions, negative as well as positive unidirectional spillovers favour larger downstream populations. With myopic voters that neglect migration flow, this pattern is not achieved and the downstream population is large for positive spillovers and small for negative spillovers. Centralized jurisdictions are preferable to decentralized ones for smaller spillover effects if migration is possible. This argument is even stronger if voters take migration responses to the provision of public goods into account. The results shed light not only on the federal organization of flood management, but also on the institutional difficulties that arise from the current policy paradigm of the river basin approach to water management.

Ellen Sarquah

The Government of Ghana introduced the decentralization concept in 1988 as part of hereffort/determination to make local government administration autonomous in Ghana. Themain aim of the concept was to make the people at the grassroots part of the decision makingprocess with the view to ensuring total socio-economic transformation of the country. Untilthen, decentralization was not a new phenomenon in the politics of Ghana, however, it hassince 1988, assumed a new dimension. New structures and institutions such as the NationalDevelopment Planning Commission (NDPC), and the District Assemblies Common Fund(DACF) were established by law. These structures and institutions sought to transfer means,skills, power and competence to the districts. The DACF is believed to be the majorinnovation under the reform. The fund, which constitutes five percent of the National Income(NI), is disbursed by the central government to the districts through the Office of the CommonFund Administrator. In addition, each DA is required to generate revenues from local sourcesreferred to as Internally Generated Fund (IGF) to supplement the DACF to carry out socioeconomicdevelopment of the local areas.It is against this background that, this study was carried out to describe and explain theimplementation process of the Fiscal Decentralization Policy in the Akuapem South Districtof Ghana. The study set out to describe the assumption that inadequate bureaucratic resources,lack of political resources, poor economic and social resource and lack of inter-governmentalcommunication and enforcement agency may impede effective implementation of the fiscaldecentralization policy in the district. The Mixed method approach of social science researchand a case study approach were used in the study. Interviews and questionnaires were used tosolicit data for the study.The research found out among things that the fiscal decentralization policy is underway.However, the ability and capabilities of the DAs implement the policy is affected by variousseveral factors namely bureaucratic resource such as technical, managerial and financialresource; political resource which implies the acceptance by the bureaucrats of the policy;economic and social resource such as the social condition prevailing at the time of theimplementation; and the inter-organizational communication and enforcement agencieswhich refers to the relationship between the policy makers and the implementers. The studyconcludes that for effective implementation of fiscal decentralization in Ghana there is theneed to provide the necessary resources intended for the policy.2The study seeks to investigate the implementation of the fiscal decentralization policy in theAkuapem South District of Ghana. It aims to highlight some of the challenges confrontingthe district in the implementation of the policy and the strategies being employed to meetthese challenges.

Sonia Esteban Laleona, Pablo de Frutos Madrazo, María José Prieto Jano

Traditionally, the academic debates about the benefits that the existence of multilevel government structures provide have been directly related to the gains in efficiency that derive from the processes of decentralization of the Public Sector. However, as of the last decades, the Public Finance has broadened its analysis towards other questions, one of them being if the fiscal decentralization influences positively in the economic growth of a country. The objective of this document is to provide a "reading guide" for this new line of investigation on the influence of fiscal decentralization on regional economic growth.

Anwar Shah

The book is divided into two parts. The
\n first part macro federalism provides a fresh look at
\n emerging constitutional challenges arising from
\n globalization and the information revolution, as well as the
\n dynamic-efficiency and growth implications of existing
\n federal constitutions. Several aspects of these systems are
\n examined: (a) institutional design to achieve internal
\n economic union; (b) policies for regional development; (c)
\n conduct of monetary policy; (d) coordination of fiscal
\n policies, with a special emphasis on tax harmonization; and
\n (e) management of risks of insolvency from sub-national
\n borrowing. The second part of the book local finance
\n provides a comparative perspective on local finances and
\n measures the progress of decentralized governance reforms in
\n developing countries.

Charisma Malixi

This study proceeds from the obvious assumption that without revenue powers and expendi-ture autonomy any devolution of functions on local governments remains hollow. Without resources local self-government is an exercise without much scope for decision-making. But even if local governments do have adequate revenue powers, their fiscal autonomy may be curtailed by utterly restrictive and, often Byzantine, administrative regulations of the central state, erratic interventions by the central government and – for fear of being not returned to office in future elections - a lack of will among local leaders to utilize the revenue powers vested in local authorities. 
<br>\tAlthough there is a plethora of literature on decentralization in the Philippines, the literature reflects what Linn,48 Smoke,49 and Smoke, Martinez-Vasquez and Peterson 50 have deplored elsewhere in relation to fiscal decentralization in more general terms: there is not much systematic research on how the Local Government Code of 1991 affected the fiscal capabilities of local governments. Most of the decentralization literature stands in the tradi-tion of the old institutionalism 51 and thus strongly centers on legal-institutional aspects and the historical evolution of decentralization in the Philippines. The few serious studies are by now dated 52 or are difficult to access because they are studies commissioned by bilateral and multilateral donor organizations.53 
<br>\tThe main objective of this study is thus to explore as to what extent in the Philip-pines the devolution of functions has been accompanied by an adequate allocation of re-sources to local governments. Local fiscal capacities are thus considered as the litmus test for the success of decentralization reforms in the Philippines. 
<br>This dissertation is organized into five parts. Chapter 1 discusses the theoretical foun-dation of decentralization as well as the study’s significance, scope and limitations, and methodology. In particular, the theoretical foundation lays down the debate between centrali-zation and decentralization as well as the differing contexts – political and economic - of de-centralization. The research question and the study’s possible contribution were also ex-plained in this chapter.
<br>Chapter 2 describes the Philippines’ political-legal structure and its local government system. It also briefly outlines the major changes brought about by the Local Government Code of 1991, the most extensive reform legislation on local governments in the country’s history. 
<br>Chapter 3 presents the overall or macro-view of decentralization in the Philippines. First, decentralization and local autonomy were explained using the Local Government Code of 1991 wherein the new Code became a catalyst to personnel, functional and fiscal decen-tralization. Second, the local financing structure was described by presenting the trends and dynamics between the central and local governments in obtaining the consolidated LGU in-come and expenditures from 1985 (pre-LGC of 1991) until 2001 (after the passage of the LGC of 1991). Third, the Local Government Code and the LGU Performance were evaluated using the results of the Local Productivity and Performance Measurement System (LPPMS) as a self-assessment tool. 
<br>Chapter 4 presents the case studies in Bataan and Pampanga on fund sourcing as well as the performance of the Central Luzon Region in local fiscal administration. The case studies will show the experiences of the provinces, cities and municipalities in resource mobilization under the regime of decentralization. This Chapter will also show the impact of inflation or increase in prices in the increase in income on whether the inflation to increase in income leads to real growth in a particular locality. 
<br>Chapter 5 provides an analysis of the results and observations of the study.

Sandra Krtalić, Alessandro Gasparini

Most modern countries, whether they are unitary or federal, have several levels of territorial government as one of the imperatives of the modern organization of the state, operating in order to meet the most disparate needs encountered at lower levels of government.Different countries have different levels of government, and each of them a different hierarchy of public administration bodies where citizens decide on the offer of public services and their financing through elections.While the role of the central level of government is today in the creation of a national infrastructure and development of a better qualified workforce in order to make the state competitive internationally, the importance of the local government is before all in the creation of the entrepreneurial infrastructure, transport and communications.Therefore, it becomes clear that lower levels of government have an increasingly important role in the development of the country so that a growing number of countries worldwide are implementing reforms in the area of fiscal decentralization.Nevertheless, although desirable, fiscal decentralization is not an easy task for any state.There are numerous problems and obstacles in that process, which influence the decision on decentralization, fiscal smoothing and the issue of state intervention.

Purwanto Subroto

This study examined the current decentralized system in Indonesia for increased disparities in educational expenditures across districts. It also examined the impact of these on the quality of education at public junior secondary education. The study used the most recently available data from the Ministry of National Education (MONE) and Central Bureau of Statistics (BPS) covering 1999/00 and 2002/03. These data measured district level school expenditures, demographic and socio-economic variables.The study found that the current decentralized system in Indonesia increased fiscal capacities for education at districts. Unfortunately, increases in the fiscal capacities for education led to increased disparities in education expenditures per student, creating growing gaps in fiscal capacities for education across districts. Districts which received larger general allocation funds (DAU) per capita were also more likely to allocate more funding for education, whether or not they were poor or wealthy districts. This fact was reflected by the finding that district GRDP per capita in sub-national regions of Java-Bali and Sumatera had no impact on districts' education expenditures per student. In addition, the sub-provincial districts of the Kota (more urban) and Kabupaten (less urban) also differed in the way that they allocated funding for education. The Kota in the Sumatera region tended to allocate significantly more for education than did the Kabupaten. At the same time, the Kota in Java-Bali did not allocate significantly more for education than the Kabupaten. Teacher compensation was national, so funding variance was measured by locally controlled variables. The most significant impact on student achievement were teaching and learning process expenditures (textbooks, libraries, labs, field trips, etc.). The study concluded that increased funding, combined with more efficient budget allocations, were keys to quality improvement. Policy recommendations include: a) targeting DAU transfers to reduce the gaps in fiscal capacity for education across districts; b) rewarding districts with effective budget allocations that support improved student achievement; and c) placing education closer to the center of development and security policy. Better government monitoring and district transparency is needed for this major investment. Improved policy research and reporting capacities are needed, including annual reports on decentralization policy implementation.

Weena Gera

Across the broad issues of decentralized governance in the Philippines, the process of fiscal decentralization continues to require thoroughgoing analysis vis-à-vis the incessant protests against purportedly unfair distribution and use of the country’s fiscal resources. This paper analyzes the institutional framework defining the country’s intergovernmental fiscal relations that would highlight the critical role of central-local political structures in shaping fiscal decentralization. It examines how the policy standardization, resource coordination and allocation, and monitoring and evaluation in the country’s intergovernmental finance affect the distribution, generation and use of fiscal resources. Key issues noted include : 1) limited devolution of budget; 2) constrained intergovernmental fiscal transfer system (insufficient and unlawful allocation of funds; lack of transparency and exercise of discretionary powers in the use of fiscal resources); and 3) low levels of local revenue generation. These issues intersect along a contradiction of powers between the local and central government politicians which predominates in an intergovernmental fiscal structure evaluated in this study as lacking in meaningful institutionalization. The basic paradigm of this paper is based on the assumption that decentralization as a political process can best be operated within the framework of centrally-led institutionalization.

M. Freitag, A. E. Vatter

This article analyses the relationship between decentralization and the extent of fiscal discipline in the Swiss cantons between 1984 and 2000. From a theoretical point of view, decentralization and federalism can be associated with both an expansive and a dampening effect on government debt. On the one hand, decentralized structures have been argued to lead to a reduction of debt due to inherent competition between the member states and the multitude of veto positions which restrict public intervention. On the other hand, decentralization has been claimed to contribute to an increase of public debt as it involves expensive functional and organizational duplications as well as cost-intensive, often debt-financed, compromise solutions between a large number of actors that operate in an uncoordinated and contradictory way. Our empirical results show that in periods of prosperous economic development, the architecture of state structure has no impact on debt. However, the degree of decentralization influences debt in economically poor times: In phases of economic recession, administratively decentralized cantons implement a more economical budgetary policy than centralized Swiss member states.

Massimo Giannini

This paper develops a two‐period overlapping generations model with heterogeneous agents aiming at analysing how decentralization in the provision of public education affects growth and personal inequality via human capital investment. Education is financed by a tax levied by either national or local authorities. The tax rate is chosen according to a median voter mechanism. During their working period of life, individuals look after their offspring by providing them with a high level of school education stemming from taxation. In addition parent's contributions to the social security system provide them with retirement income. Heterogeneity accounts for the differences in the optimal taxation mechanism, linking the income distribution to the tax rate, and hence to human capital accumulation, growth and income inequality. In this way we relate differences among agents to the tax rate. We show that decentralization induces growth rate disparities among local communities but it can be ruled out by a proper fiscal substitution between social security and locally provided education. Unlike in the literature, this type of fiscal design allows local economies to grow faster and more equally than the national design.

Eric A. Hanushek, Kuzey Yılmaz

An important element in considering school finance policies is that households are not passive. Instead they respond to policies with a combination of modified residential choice and political choice of tax levels. The highly stylized decision models of most existing analyses, however, lead to concerns about the policy evaluations. In our general equilibrium model of residential location and community choice, households base optimizing decisions on commuting costs, school quality, and land rents. With both centralized and decentralized employment, the resulting equilibrium has heterogeneous communities in terms of income and tastes for schools. This model is used to analyze a series of conventional policy experiments, including school district consolidation, district power utilization, and different equalization devices. The important conclusion is that welfare falls for all families with the restrictions in choice that are implied by these approaches.

Alia Ahmad, M Bose, Therése Persson

Bangladesh has made significant progress in health indicators in recent years in spite of her low level of income. This is mainly due to the commitment of the state supported by donors in providing preventive care with respect to child health and family planning. However, there are serious problems related to both access and quality of curative care that hurt the poor most. Infrastructures for service delivery exist at local level in rural areas but they function inefficiently. This paper deals with the systemic weaknesses of decentralized service provision of primary healthcare in Bangladesh and focuses on accountability links between different actors and functions of delegation, finance, performance, information and enforcement. The study is based on facility- and household-based data collected during 2005 in Khulna Division. The main findings of the study are: the health system in rural areas represents deconcentration rather than decentralization of central government functions where inter-sectoral discipline works poorly; local health providers are not accountable to local government, and poor citizens/clients are neither aware of their rights nor are capable of expressing their needs as effective channels do not exist.

Hrvoje Šimović

Development of the European integration through the European Union (EU) considers not only strengthening integration from the economic aspect (internal market). It also considers the political aspect of the integration i.e. strengthening political integration of member states and their citizens. Political segment of integration considers strengthening of the internal policies of the EU in which fiscal system, i.e. public finances have extremely important role. The EU fiscal system presents reflection of the extremely strong and often confronted interests between the economic and the political integration. These issues are closely related to the second component of the European politic and economic integration, that are the fiscal relations between the EU “central” level and the national “lower” levels which bring the all important decisions in the EU. According to the theory of public finance (fiscal federalism) and the criteria of economic efficiency, fiscal functions (allocation, redistribution, stabilization) and activities are assigned to the different levels of government, as well as certain resources for their financing. On the basis of fiscal functions carried out by national levels in the EU, and the manner of their financing, the EU is a prominently fiscally decentralized complex community. The traditional approach to the fiscal federalism that fiscal authorities are transferred from central to lover levels means that this is a process of decentralization, while in the case of the EU this means centralization of fiscal authorities from the level on national states to the EU as a supra-national level. The main goal of this paper is to analyze fiscal relations in the EU according to basic fiscal functions: allocation, redistribution and stabilization. Methodology would include analysis and comparison of positive EU aspect with normative aspect of public finances in multi-level community. Induction of gained results will confirm thesis that, because of political restraints, development of common (central) system of the EU public finances is based on alternative approaches of harmonization and cooperation.

Hikaru Ogawa, David E. Wildasin

In this paper, we analyze a class of models in which there are interjurisdictional spillovers among heterogeneous jurisdictions, as illustrated for instance by CO2 emissions that affect the global environment. Each jurisdiction's emissions depend upon the local stock of private capital. Capital is interjurisdictionally - mobile and may be taxed to help finance local public expenditures. We show that decentralized policymaking leads to efficient resource allocations in important cases, even in the complete absence of corrective interventions by higher - level governments or coordination of policy through Coasian bargaining. In particular, even when the preferences and production technologies differ among the agents, the decentralized system can still result in globally efficient allocation.

Md. Awal Hossain Mollah

Administrative Decentralization seeks to redistribute authority, responsibility and financial resources for providing public services among different levels of government. Administrative Decentralization is the transfer of responsibility for the planning, financing and managing of certain public functions from the central government and its agencies to field units of government agencies. This paper will search for a common theoretical framework of decentralization, then analyzes and assesses the initiatives for decentralization of administration that have been constructed after the emergence of Bangladesh. The major issues and problems of implementation of the decentralization policies in Bangladesh are also discussed suggesting policy measures. This paper is analytical in nature.

Lars–Erik Borge

Compared with most countries the Norwegian system of financing local governments is highly centralized. Grants make up a substantial part of revenues and local taxes are highly regulated by the center. The development of the system was motivated by a desire to equalize service provision throughout the country. The purpose of this paper is to analyze possible consequences of more decentralized financing with local tax discretion. Contrary to the conventional wisdom the analysis indicates that decentralized financing is likely to give more equal provision of local public services. In addition, substantial efficiency gains can be obtained.

Ming Su, Quanhou Zhao

China has experienced more than 25 years of extraordinary economic growth. Underlying this growth has been a decentralized fiscal system, in which provinces and large cities are given the freedom to make infrastructure investments to stimulate local development, and are allowed to retain a large part of the fiscal revenues that are generated from economic activity. Although successful as a growth strategy, this policy created two problems for national fiscal management. First, it significantly reduced the central government's share of fiscal revenues, which fell from 34.8 percent in 1980 to 22 percent in 1992. Second, it widened economic and fiscal disparities between the rapidly growing urban coastal region and the rest of the country. Rapid growth in subnational debt (which rose 23-fold in a decade) and subnational nonperforming loans (estimated by the authors to range between US$100 billion and US$150 billion) has placed pressure on China's financial system. Traditionally, China has favored bank lending as a source of finance because the banking system has provided a vehicle for central political control over local debt. But as China's financial system matures, creditworthiness standards must become more important. The authors recommend greater use of the revenue streams from infrastructure assets as a financing source, and gradual relaxation of central political control over subnational debt. One step in this direction would permit leading cities to issue municipal bonds based on objective financial standards.

Eric J. Brunner, Jon Sonstelie

The 1971 ruling of the California Supreme Court in the case of Serrano v. Priest initiated a chain of events that abruptly ended local financing of public schools in California. In seven short years, California transformed its school finance system from a decentralized one in which local communities chose how much to spend on their schools to a centralized one in which the state legislature determines the expenditures of every school district. This paper begins by describing California's school finance system before Serrano and the transformation from local to state finance. It then delineates some consequences of that transformation and draws lessons from California's experience with school finance reform.

Kirill Danishevski

The Russian Federation has undergone a process of major constitutional change in the post-communist period, as a strong central government has ceded extensive powers to the regions. This has important implications for the organization of the health care system which, as with other elements of the Soviet system, had previously been highly centralized. Although it is now well-recognized that the powers of the Federal Health Ministry have weakened considerably, the precise scale and nature of the process of decentralization remain imperfectly understood. This paper provides new evidence on the nature of decentralization in the Russian Federation since the breakdown of the USSR, reporting the results of case studies undertaken in six regions of Russia (Samara, Tver, Tula, Chelyabinsk, Sverdlovsk and Moscow oblasts) to describe the organization of health care financing, regulation and delivery. It shows that while there is a common model of health system (with the exception of Samara, where an innovative model was implemented), there are many minor variations. The study confirms the limited scope for action by Federal authorities, but also shows that the power vested in the regional governments is more limited than was previously thought. Instead, the municipalities (rayons) emerge as important bodies, as they own the facilities in which much of the routine health care is delivered and, both directly and indirectly, by virtue of their contributions of insurance premiums for the non-working, provide a substantial amount of health care financing. The study demonstrates the complexity of the Russian health care system and identifies the widespread absence of mechanisms that might be used to bring about much needed change.

Richard Bird, François Vaillancourt

This book addresses a variety of issues
\n relating to intergovernmental finance and the provision and
\n financing of local services including budgeting and
\n financial management, the institutional framework for the
\n conduct of intergovernmental relations, appropriate methods
\n of service delivery in metropolitan agglomerations and
\n remote rural areas, local government enterprises, user
\n charges, property taxes, income and value-added taxes,
\n natural resource taxes, and local business taxes.
\n Throughout, the authors draw on experience both in Canada
\n and in other decentralized countries and consider to varying
\n extents the special problems facing Russia and other large
\n transitional economies.

Bhisma Murti

Contracting out is the practice of public sector or private firms of employing and financing an outside agent to perform some specific task rather than managing it themselves.The rationale for contracting is that public providers lack the incentive to use resources efficiently, and that private (or autonomous) providers are more efficient than public providers.Contracting out clearly separates the roles of purchaser and provider, and tightly links payment to performance of the provider.According to classical economic theory, contracting stimulates competition among providers in managed markets, induces cost awareness among providers and purchasers, and enhances transparency in negotiations.Providers are forced to minimize production cost and adjust the prices to meet the demand and requirements of purchasers.All these factors contribute to efficiency.In addition, contracting would promote decentralization managerial responsibility, a shift that would translate in efficiency gains in contrast to the old highly-centralized, bureaucratic structure, considered insensitive of the cost implications of allocative decisions.As is the case with any model, contracting out approach is not a panacea to all health problems.But in light of the limited absorptive capacity of the public sector, it is an alternative strategy worth considering for increasing the coverage and the quality of services in developing countries such as Indonesia.Monitoring and evaluation is an indispensible instrument for contracting out to exhibit its relative advantages.

Odd‐Helge Fjeldstad

The growth of Africa’s towns and cities has outpaced local authority capacity in terms of management, infrastructure, and financing. Many African towns and cities are now facing a governance crisis. Accordingly, the capability and capacity of urban local government to provide basic services to a growing population have entered the core of the development debate. In particular, fiscal decentralization – the devolution of revenue mobilization and spending powers to lower levels of government – has become a main theme of urban governance in recent years.\nThis paper explores the opportunities and constraints facing local revenue mobilization in urban settings in Africa. The study examines various revenue instruments available, including property taxes, business licences, and user fees, and their effect on economic efficiency and income distribution. Moreover, political and administrative constraints facing various revenue instruments and factors impacting on citizens’ compliance behaviour are discussed. The analysis is exemplified by cases from across Africa and other regions. Local governments need to be given access to adequate resources to do the job with which they are entrusted. However, a general conclusion emerging from this study is that local revenues mobilized in most urban authorities in Africa are necessary but not sufficient to develop and supply adequate services for the fast-growing urban population.