Fiscal decentralisation : domesticating a methodology for Lesotho

Abstract

Lesotho adopted decentralisation as the policy for promoting popular participation and to better local public services for securing socio-economic wellness for Basotho. Pursuant to 2005 local government elections, the country established a full operational subnational government structure. Lesotho experienced a notable progress in implementing political and administrative decentralisation explained through the presence of guiding legal frameworks. However, there is no legislation dedicated for the implementation of fiscal decentralisation. The impact of the absence of fiscal statute is reflected in multiple subnational government financial challenges such as unfunded mandate and dependency on national government financing. The national decentralisation policy was developed to create a platform for reshaping the decentralisation process through development of comprehensive supporting legislations. The focus of the study is to conceptualise fiscal decentralisation and develop a domesticated methodology for Lesotho. Consequently, the main research question was: What is the best fiscal decentralisation methodology for Lesotho? The literature conceptualise fiscal decentralisation as the legislative allocation of fiscal powers in terms of revenue and expenditure as well as intergovernmental transfer between government spheres. The fiscal decentralisation theories were used to explain the best practices for the assignment of functions and design of intergovernmental transfers for improving local service delivery. The study was conducted using mixed methods research to enable complementarity of methods. The data was collected through document analysis, questionnaires and interviews within local councils in the four districts namely: Maseru, Berea, Mohale’s Hoek and Thaba-Tseka. The study established that fiscal decentralisation is an important component of decentralisation. The study also revealed that Lesotho does not have fiscal decentralisation statute to guide subnational government financial system. In this regards, fiscal decentralisation is realised as the weakest link in Lesotho’s decentralisation process. The developed methodology presented the content of fiscal decentralisation statute with regard to assignment of functional responsibilities, subnational government financing, subnational financial management system and intergovernmental fiscal relations. It is believed the methodology will enable Lesotho to achieve decentralisation objectives. The study contributes to the limited body of knowledge on the theories that underpin fiscal decentralisation research aiming at the better diagnosis of its role in the success of decentralisation process. The current study is part of the policy advisory system for the development of fiscal decentralisation statutes for Lesotho. In this regard, the study is a scientific contribution to the policy development process that aims at assisting the country to develop a constructive and effective fiscal decentralisation statute.