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a) Historical background to the implementation of the decentralization process in Tanzania:
Tanzania country profile
Tanzania is the largest and most populous in East Africa. It has an area of 945,087 km2 and a
population of 38,478,000 people. The average density is 40.7 persons per km2. The urban
population of 10,128,000 people is equivalent to 25 percent of the national population (UNICEF
2007:5). Tanzania is urbanizing rapidly due to high rates of rural-urban migration. The urban
population grew at 4.6 percent p.a. between 1990 and 2007, nearly twice the national population
growth of 2.7 percent p.a. (UNICEF 2007:5). Dodoma (population 183,000), is the designated
capital city but Dar es Salaam (population of 2,937,120 (29% of the urban population) is the
primate city and the main transport, administration, business and service center of the country
(UN-HABITAT 2008:14).

Socio-economic data
Tanzania is the poorest country in East Africa (Ehrhart and Twena 2006: 5), with a gross
national income per capita of USD 400 in 2007 (UNICEF 2007:5). The GDP grew by 7.1 percent
in 2007 (Fig. 1) and the service sector accounts for the largest share of GDP (Fig. 2). 36 percent
of the population lives below the basic needs poverty line (URT 2005:2). Lack of formal sector
employment opportunities has led to an increase of informal sector employment (Fig. 1).
Agriculture (including livestock) and informal sector activities (See Table 1) are of central
importance, providing income and employment to 77.0 percent and 9.3 percent of the active
labour force respectively in 2006 (URT 2008a: 90).

Table No. 1: Employment by Sector, According to National Definition (percentage)
             Sector 2000/2001 2005/2006

Source: Integrated Labour Force Survey, 2005/06
Surveys reveal high rates of unemployment of 11.0 percent nationally, 31.4 percent in Dar es
Salaam city and 16.3 percent in the other urban centres in 2005/06 (URT 2008: 91).

   Figure 1: GDP Growth Rate 1998 -2007

   Source: United republic of Tanzania: The Economic Survey 2007

   Figure 2: Share of Gross Domestic Product by Kind of Economic Activity in 2007

                        Source: United republic of Tanzania: The Economic Survey 2007
   Source: Integrated Labour Force Survey, 2005/06

HIV/AIDS continues to pose a serious threat to the social and economic welfare of Tanzanians.
Surveys indicate that the national level of HIV/AIDS prevalence was 6 percent in 2007. HIV
prevalence is higher among women than men (7 percent and 5 percent, respectively). Prevalence
was also higher in urban areas (8.7 percent) than in rural areas (4.7 percent (URT 2008c: 33).

Cultural diversity, literacy rate
Tanzania has more than 120 tribes and except for a small percentage of urban based non African
communities, the ethnic composition is predominantly African. Despite the many tribes,
Tanzania‟s society is culturally unified through Kiswahili, the national language that was
promoted since independence in 1961 while traditional, tribal based leadership regimes were
abolished in an effort to consolidate the unity of the newly independent nation. The adult
literacy rate for 2000 – 2007 is 72% (UNICEF 2007:1) but that literacy rates have, for long been
higher for men than for women (Fig. 4).
Figure 4: Literacy rates for adults over the age of 15, Tanzania, 1980 - 2000

Source: EarthTrends 2003 UNESCO,

Rationale for decentralization:
The rationale for decentralization in Tanzania was the desire by government to enhance
efficiency in executing development projects and in the provision of services which were under
the control of the central government. Central government ministries then held control over
financial and human resource, instructing the councils through Regional Administrations in the
operationalization of service delivery responsibilities at the local government level, in a situation
that did not bring the required outcomes.

Historical background to decentralization and the subsequent trends:
Tanzania‟s attempts to encourage decision-making at the sub-national level, dates back to the
1960s when the government created a Region Development Fund, formed a ministry for
Regional Administration as well as Rural Development and Regional Economic Secretariats to
support community self-help development initiatives. A „decentralization‟ program initiated in
1972 to strengthen the role of regional and district level administration transferred all key
functions for development planning, coordination and management to the regions and districts.
Regional, district and ward development committees coordinated local level planning and
development and Village Councils were established in 1975 to strengthen grass-root
participation in the decentralization process. Powers for decision-making and for resource
allocation, however, remained at the centre and the LGAs were abolished in 1972, resulting into
reduction and poor provision of social services at local government level. Local governments
were re-introduced in 1984 and the government adopted a Policy Paper on Local Government
Reform in 1998 which put in focus the policy of “decentralization by devolution” (D-by-D) The
aim was to improve the quality of public service delivery, particularly to the poor by involving
the people in decision making so as to promote good governance and reduce poverty.

The Local Government Reform Programme (LGRP) was launched in 2000 to support
implementation of the local government reform which “aims to promote democratic, accountable
and autonomous local government authorities, with wide discretionary powers and a strong
financial base implemented by 2011” (LGST, 2006). The focus of the LGRP is on building
capacity of the LGAs to enable them assume greater responsibilities, to deliver services more
efficiently and to more extensively exercise control over their resources. The intention was to
limit the role of sector ministries so that they provide technical guidance on sectoral issues, set
relevant sector policies and legislative guidelines for LGAs, determine sector specific service
delivery standards and monitor performance; and they were expected to reduce the extent to
which they determined the composition and allocation of resources available to the LGAs.
Implementation of the LGRP (Phase I) was concluded in June 2008 but many of its objectives
appear not to have realised. The Joint Government-Donor Reviewsi (2002; 2004 and 2006) have
consistently shown significant progress to have been made at LGA level where considerable
reforms have taken root but very little has been achieved in terms of fiscal decentralization.
Implementation of Phase II of the LGRP is planned to commence in July 2009.

The legal and institutional framework underlining the decentralization process:

The Constitution of the United Republic of Tanzania states categorically that “the purpose of
having LGAs is to transfer authority to the people.” Article 146 of the constitution states that one
of the objectives of the local government is to “enhance the democratic process within its area of
jurisdiction and to apply the democracy for facilitating the expeditious and faster development of
the people” (URT, 1997). The constitution requires of LGAs “to involve the people in the
planning and implementation of development programmes within their respective areas ...”
(URT, ibid). Tanzania‟s decentralization process is therefore based on the solid foundation of the
national constitution.

Outline of the progress recorded in terms of decentralization and local governance:

Various forms of decentralization in Tanzania:

Tanzania‟s decentralization focuses on four key areas namely political, administrative, and
financial and the inter-governmental relations. Political decentralisation involves devolving
powers to the LGAs, setting the rules for the councils and their organs of the LGAs and
strengthening the local government system as the most important local political bodies within
their areas of jurisdiction. Administrative decentralisation involves the de-linking of local
authority staff from their sector ministries, establishing a local payroll and enabling LGAs to
recruit their own human resources in order to improve service delivery and enhance
accountability to the people. Financial decentralization involves granting the LGAs more
financial discretionary powers to levy taxes and raise local revenue, to make and approve their
own budgets according to their own priorities as dictated by local conditions and needs of
residents, while observing certain mandatory expenditure requirements to attain national
standards and improving the inter-governmental fiscal transfer system to ensure that LGAs
receive adequate unconditional and other grants in a timely and efficient manner. Improvement
of the central-local government relations means creating an enabling environment for the LGAs
to deliver local services and operate with autonomy, while the central government retains over-
riding powers within the framework of the constitution with line ministries relinquishing the role
and functions of execution to take up the role of policy making, providing supportive services
and capacity building to the LGAs, monitoring and quality assurance, and regulatory functions
through legal control and audit of the LGAs. The Minister responsible for local government
would coordinate central-local relations and in particular, all initiatives from sector ministries on
matters relating to local governments. The Regional Administration Act No. 19 of 1997 was
revised and the principle legislations on local government were revised in 1999 and d2000
respectively to give effect to the good governance reforms by redefining the central-local
relations to grant greater autonomy and decision-making authority to the LGAs.
Decentralization has empowered lower tiers of LGAs to raise and manage revenue and
expenditure. Village Councils can for example make by-laws to prescribe fees, charges and
tariffs for the licenses or permits they issue vide Section 9 (1) of the revised Finance Act.
Decentralization has created opportunities for more direct involvement of communities in
controlling public revenue and expenditure through service user committees and boards. The link
between the local level planning and budget processes and the central government‟s Strategic
Budget Allocation System has been strengthened through the Plan-Rep system. Introduction of
formula-based grant systems has made transfers more equitable, predictable and efficient though.
The government‟s commitment to the principle of formula-based allocations is weak, with some
recurrent and development allocations deviating substantially from the formula (LGFR 2007: 4).
The share of expenditures that take place at the local government level has increased but the
LGAs continue to have limited control over local expenditure and a limited degree of revenue
autonomy (LGFR 2007: 4). In FY 2006/07 for example, LGAs collected TShs. 61.4 billion in
own source revenues, which is 6.7 percent of total revenues of TShs. 921 billion for the LGAs.
The Local Government Finances Act has been periodically amended to reflect intermittent
reform efforts but it has never been comprehensively reviewed to align it with the Public Finance
Act of 2001. “As a result, the Act and its implementing regulations no longer provide a well-
structured legal and regulatory framework for guiding local government finances. Instead, the
Act includes numerous unclear, duplicative, and in some cases contradictory clauses.
Furthermore, the LGFA” (URT 2006:2).

Territorial Organization:

Tanzania is a unitary republic, formed by the union of Tanzania Mainland and the Zanzibar
Islands. The central government on the mainland is organized in three levels comprising 21
administrative regions which are subdivided into 113 districts. Each district is further subdivided
into Divisions. The local government structure on the mainland comprises urban authorities and
district authorities, which exercise autonomy in their areas of jurisdiction (Table 3). Urban
authorities include city councils, municipal councils and town councils. The district authorities
also coordinate activities of the township authorities and village councils (LGST 2006).

Table No. 3     Teritorial Organization: Levels and Number of sub - national tiers:

 1st Level    2nd Level      3rd Level     4th Level   5th       6th Level    7th Level
 4 Cities    17 Munici-        6 Town      97            2,555     10,397       1,755 Mitaa (urban
             Palities,         Councils    Township      Wards     Village      Sub-ward)
             106 Districts                 Authorities             Councils

The right of sub-national entities to formulate and adopt their own constitution and

The entire United Republic is governed by one constitution and sub-national organs have no
authority to adopt their own constitutions. LGAs are empowered by legislative delegation to
make by-laws for carrying out their functions, and to impose penalty in fine or imprisonment for
breach of the by-laws. By-laws are which must be consistent with, and not override or otherwise
derogate from any of the written laws and they are subject to approval by the Minister
responsible for Local Government.

The election of local government representatives (mayors and councillors):
Tanzania has always abided by the principles of free and fair elections and local level democratic
leadership is considered a priority in the constitution, which states that one of the basic functions
of each LGA is “to consolidate democracy in its area and to apply it to accelerate the
development of the people.” The central government closely monitors local level democracy
though annual benchmarking of all LGAs so as to ensure that by-elections are held regularly to
fill in local political positions that fall vacant. The Local Authorities (Elections) Act No 4 of
1979 was revised in 2000 to enable LGAs play a greater role in managing national and local
government elections in their areas of jurisdiction by for example appoint Council Directors as
returning officers for all elections.

Transparency of the electoral process

Tanzania‟s electoral process is open and transparent manner. Registered political parties are
invited to discuss proposals for any new electoral laws and regulations or for any amendments
and their views are taken into consideration. The parties nominate candidates to contest various
political positions according to their own constitutions, rules and regulations without interference
from the government. During elections, the national elections commission holds regular
consultations with contesting parties to reach consensus on election procedures, logistics and
timetables. The parties have a right to post agents at the voter registration, polling and tallying
stations and independent observers (local and international) monitorthe elections.

The precise situation of the local personnel and its impact on decentralization
(qualifications, recruitment procedure, training programmes):

Administrative decentralisation aimed to enable the LGAs recruit and administer their human
resources, but the Public Service Act 2002 and subsequent regulations centralized management
of all civil servants, including those at the LGAs. LGAs must for example, obtain permission
from the central government to recruit new staff. Besides, the Prime Minister‟s Office – Regional
Administration and Local Government, exercises unilateral control over the appointment, posting
and transfer of council directors, Heads of Departments and other key LGA personnel. The Act
allows for mobility of employees among employers. Because conditions of service are much
better in the central government and other sectors, LGAs lose the staff they recruit and train at
great cost to the central government, private sector or to Civil Societies.

The presence of women elected representatives at the local government level
The Government has taken affirmative action to include women in decision-making positions.
The Constitution of the united Republic of Tanzania for instance provides for a 30 percent quota
women representation in the house of parliament, to be distributed in proportion to the number of
votes obtained by the political arties, with a minimum vote threshold of 5 percent (National
Electoral Commission 2006:75-76). As a result, representation of women in the house of
parliament increased 21.51 percent to 31.60 percent in 2000 – 2005 (EISA, 2008:1).
Table No. 4: Women Members of Parliament in Tanzania Mainland 2000 – 2005

Platform                                  2000                                  2005
                           Total        Women       % Women       Total       Women    % Women

Constituency               231          12          5.2           232         18       7.8
Special                    48           48          100           75          75       100
Nominated                  10           2           20            10          3        30
Total                      289          62          21.5          317         97       30.6
Source:        Msafiri, R. B. 2007:6
Legislation provides for a quota of not less than one-third of elected representatives at the LGA
level (National Electoral Commission 2001, 77). Consequently political representation of women
from village and district councils has increased from 25 in 2005 to 35 percent in 2007 (URT
2008:105). Women must account for 25 percent of Village councils that have between 15 and 25
members elected for a term of five years (LGST 2006:3).

Regularity of the electoral terms:

Councillor‟s elections take place along with presidential and parliamentary elections during the
general elections, held at regular five year intervals. The current councillors were elected into
office during the 2005 general elections and the next round of elections will take place in 2010.
Local government elections for the grassroots leaders namely Mitaa (Urban sub-wards), village
government, Mitaa (Urban sub-wards) and „Vitongoji‟ (rural hamlets) leaders are also held
regularly at five year intervals but they take place one year earlier than the general elections. By-
elections are held regularly to fill in positions that fall vacant at all levels and the central
government monitors democratic representation through annual performance assessments and
benchmarking of all LGAs, to ensure that elected positions that fall vacant at the grass roots
levels are filled promptly.

The rate of participation in elections:

During the 2005 general elections, the national voter turn out rate for parliamentary elections
was 69.72 out of 16,407,318 registered voters (See Table 5). With the exception of Mara Region
which experienced a low voter turnout rate of 46.49 percent, the turnout rate in the other regions
was above 61 percent of all registered voters.

The role of different actors in promoting decentralization and local democracy (Civil
Society Organizations, Media, Private sector, Faith Based organizations etc)

Non-state actors play a crucial role in promoting decentralization and local democracy through
sensitization of key decision-makers, advocacy and creation of public awareness. They provide
public information and education on decentralization and local democracy, participate in
research and engage in dialogue with the government. The non-state actors also contribute
resources to support local economic and service delivery initiatives and act as watchdogs against
corrupt practices. CSOs have been instrumental in lobbying for public expenditure with pro-poor
and gender sensitive outcomes and in monitoring of public policy for resource management
including expenditure tracking to promote social accountability. CSOs also help strengthen the
voice of citizens in revenue, public resource management and social accountability processes in
the LGAs (Mary Rusimbi 2008:29).

Table No. 5    Electoral Turn Out by Regions

Source: -

The role of traditional leaders in the decentralization process:

Tanzania abolished traditional authorities immediately after independence in 1961 in a measure
designed to promote national unity. As such traditional leaders do not play any role in the
process of decentralization and there is no legal recognition of the traditional leaders in the
process of decentralization or in any other official capacity.

Coherence between level of decentralization and level of devolution:
Coherence between the level of decentralization and level of devolution is maintained through
representations in decision making organs at various levels of the decentralized local government
system. At the lowest Mitaa level decision taking is by direct representation in a meeting of all
eligible residents of the Mtaa. The law requires of the Mtaa Chairperson to convene such a
meeting by once in every two months. Decisions made at this level include identification and
prioritization of local issues during the participatory planning and budgeting process of the
LGAs. The people‟s direct involvement in grassroots meetings to discuss and prioritize
community problems and propose projects for resource allocation in the LGA budgets underpins
and gives legitimacy to Tanzania‟s decentralization by devolution. Communities contribute
resources in kind and materially to the realization of service delivery and other projects. By dint
of their presence on the ground, they regularly monitor and evaluate on-going projects.

Decisions at the Ward level are made the Ward Development Committee (WDC) which is
constituted by all the Mitaa Chairpersons in the ward. The WDC is chaired by the Ward
Councillor who also represents the ward residents in the LGA. Coherence between the level of
decentralization and level of devolution at service delivery points in the LGAs is maintained
through service user committees. Coherence between LGAs and the regional administration is
maintained through the Regional Consultative Committee (RCC) which is chaired by the
Regional Commissioner. The council Mayor or Chairperson and Directors of all councils within
the region are members of the RCC. The Regional Secretariat assists LGAs with interpretation of
government policy and legislation and they with monitor and evaluation implementation of the
Local Government Reform Program in the LGAs.

Coherence between LGAs and central government institutions is maintained through the Prime
Minister‟s Office, Regional Administration and Local Government (PMO-RALG) which
oversees implementation of the Local Government reform Program, spearheads decentralization
by devolution by strengthening the institutions of government at regional, district and local levels
and promotes sound inter-governmental relations between sector ministries and LGAs. PMO-
RALG also coordinates local level implementation of national policies and programs. Civil
Society Organizations play a crucial role in awareness creation and in mobilizing communities to
foster good governance and they provide the forum for discussions between the citizens, LGAs
and the central government organs.

   b) Analysis of revenue assignments, fiscal transfers and expenditure responsibilities:

Analyze the evolution of local finances from 2003 to 2007 (Can focus on a few case study
local authorities in the form of boxes)
“LGAs collect roughly 3-5 percent of all public sector Revenues in Tanzania but they are
responsible for over 20 percent of public sector spending” (URT 2006:1). In the five year period
from Financial Year (FY) 2002/2003 to FY 2006/2007, the level of central government transfers
to LGAs increased by 143 percent from TSh 247.0 billion to TSh 600.3 billion. Several major
local revenue sources such as development levy and business license fees were abolished as
nuisance tax the local revenue reforms in 2003 and 2004 but local own source revenues have
increased by 6.4 percent, showing remarkable resilience (Table 6). The Local Government
Finance Act was subsequently amended to define a formalized closed list of Local Government
revenue sources and LGAs are not allowed to levy any taxes, levies or fees outside of the closed
list (Box 1). LGAs have discretion to change local tax rates, albeit within centrally established
limits. As a result of the local tax reforms the LGAs lost substantial own source revenue which
weakened their autonomy but the LGAs reacted quickly by intensifying collection of the taxes
that remained in the allowable list (Figure 5). The other significant result of these changes was
to increase the level of dependency of the LGAs on fiscal transfers from the central government,
from 81.0 percent in 2002/03 to 90.7 percent in 2006/07, with detrimental impact on local
financial discretion.
    Box 1: Closed lis of Local Government taxes,
    levies, fees and revenue sources in Tanzania

    Taxes on Property                                        Meat inspection charges
           Property rates                                   Land survey service fee
    Taxes on Goods and Services                              Building permit fee
           Crop cess (maximum 5% of farmgate
     price)                                                  Permit fees for billboards, posters or
           Forest produce cess                               hoarding
    Taxes on Specific Services                               Tender fee
           Guest house levy                                 Abattoir slaughter service fee
    Business and Professionsal Liscences                     Artificial insemination service fee
           Commercial fishing license fees                  Livestock dipping service fee
           Intoxicating liquor license fee                  Livestock market fee
           Private health facility license fee              Fish landing facilities fee
           Taxi license fee                                 Fish auction fee
           Plying permit fees                               Health facility user charges
           Other business licenses fees                     Clean water service fee
    Motor Vehicles, Other Equipment and Ferry
    Licences                                                 Refuse collection service fee
           Vehicle license fees                             Cesspit emptying service fee
           Fishing vessel license fees                      Clearing of blocked drains service fee
    Other Taxes on the Use of Goods, Permission              Revenue from sale of building plans
    to Use Goods                                             Building valuation service fee
       Forest produce license fees                          Central bus stand fees
       Building materials extraction license fee            Sale of seedlings
       Hunting licenses fees                                Insurance commission service fee
       Muzzle loading guns license fees                     Revenue from renting of houses
       Scaffolding / Hoarding permit fees                   Revenue from renting of assets
    Turnover Taxes                                           Parking fees
           Service levy                              Fines, Penalties and Forfeitures
    Entrepreneurial and Property Income                      Stray animals penalty
           Dividends                                        Share of fines imposed by Magistrates
           Other Domestic Property Income                    Court
           Interest                                         Other fines and penalties
           Land rent
    Administrative Fees and Charges
           Market stalls / slabs dues                       Source:
           Magulio fees                                      ?option=com_content&task=view&id=4
           Auction mart fees                                 4&Itemid=59
Source: Matt Glasser Local Government Revenue policies – Tanzania

Table No. 6: Local government recurrent financial resources FY 2002/03 - 2006/07

Description of the system of transfers to local governments (Conditional - Unconditional) –
Use graphs to show the trends over the years up to 2007:
The national constitution requires the government to ensure that national resources are used for
the benefit of all citizens to bring about equal development and to eradiate poverty, illiteracy and
poor health. The responsibility of the central government to make fiscal transfers to LGAs is
spelt out in Section 10 of the Local Government Finance Act No. 9 of 1982. Besides, improving
the inter-governmental fiscal relations through fiscal decentralization and devolution of the
control of resource to the LGAs was among the key goals in the LGRP. Legislative changes have
been effected vide Act No. 6 of 1999 to introduce a new, formula based system of allocating
conditional block grants and to allow the central government allocate unconditional grants to the
LGAs, granting them greater autonomy to decide on how the grants are used. The government
introduced unconditional grants for those LGAs that meet minimum conditions of good
governance and sound financial management from July 2004 to provide them greater local
budget discretion.

Conditional transfers in the form of recurrent sector block grants for Personnel Emoluments (PE)
and for Other Charges (OC) are allocated on a fomula basis as common basket funds for each of
the five main sectors that deliver concurrent services at the local government level, including
primary education; primary health care services; agriculture and livestock extension; water
supply; and local roads. There are two types of unconditional transfers including a formula-based
General-Purpose Grant (GPG) to cover the cost of local government administration and part of
the cost of local government activities which are not supported by grants; and a non-sectoral
discretionary Local Government Capital Development Grant (LGCDG) which is transferred to
LGAs for capital investments in new infrastructure development and for rehabilitation of existing
infrastructure. Both the GPG and the LGCDG have some elements of equalization built into the
transfer fomula with respect to geographical area, population size and extent of poverty and
deprivation in the LGAs. The LGCDG is allocated to LGAs that meet certain qualification
criteria based on good governance and sound financial management practices. Unqualifying
LGAs are previously allocated a Capacity Building Grant (CBG) to enable them qualify for the
grant. With effect from the financial year 2009/10 however all LGAs will receive at least 50
percent of the basic LGCDG. Higher percentages of the LGCDG will be allocated on the basis of
the performance criteria.

Local /municipal aggregated budgets for all municipalities in the country by revenue and
expenditure for the last five years
Data from the Economic Survey 2007 shows that the average exchange rate of the Tanzanian
currency per USD declined from Tshs 1003.4/= in 2002/03; Tshs 1089.4/= in 2003/04; Tshs
1122.7/= in 2004/05; Tshs 1182.9/= in 2005/06; to Tshs 1277.4/= in 2006/07 (URT 2008:51).
The exchange rate for FY 2003 is calculated at Tshs 1046.4 per USD which is the average of the
rates for 2002/03 and 2003/04. Local government taxes include property tax, service levy which
is a turn over based tax, produce cess and land rent. LGAs retain only 20 percent of land rent and
remit 80 percent of the revenue to the central government. No revenues are shared between the
central and local governments. Local government fees include guest house levy, business license
fees, administration fees such as market fees, service user charges and other charges.

Table No. 7: Revenue (USD)

Revenue Type                                   2003          2004/05       2005/06       2006/07
Own        Taxes                                22.7            23.9          24.5          25.6
Revenue Fees, levies, tariffs                   23.5            14.3          17.8          23.0
Shared revenues
Conditional transfers                         328.8             462.6         478.8        608.0
Unconditional transfers including               39.8             74.9          54.3         64.9
Equalization grants and Donor Funding
Total Revenues                                414.8             575.7         575.4        721.8
Source: Local government Fiscal Review 2005, 2007
        LGA Finance Statistics, (LOGIN).
        Local Government Fiduciary Assessment

Table No. 8: Expenditures (USD)

                                           2003/04           2004/05       2005/06       2006/07
Wages and salaries                            204.9            255.6         273.8         380.1
Supplies and other current expenditures        54.3            167.1         141.2         120.6
Equipment / capital expenditures –             63.8            135.8          95.7         155.9
Debt service
Total Expenditures                            323.0             559.6        510.7         656.7
Source: Local government Fiscal Review 2005, 2007
        LGA Finance Statistics, (LOGIN).
        Local Government Fiduciary Assessment

Expenditure responsibilities at the local government level:
Assignment of expenditure responsibilities between different levels of government in Tanzania is
guided by the policy of “decentralization by devolution” according to the “principle of
subsidiarity” in which functions are assigned to, and public services are delivered by the lowest
government level that can do so more efficiently and effectively (URT 1998). The Local
Government Acts (1982) provide a detailed list of the specific functions and responsibilities
assigned to the local government level (LGFR 2007: 5) which are in four broad categories:
Concurrent, exclusive, local administration and delegated responsibilities (Table 9). Concurrent
expenditure responsibilities of the LGAs include delivery of crucial public services, but the
central government remains responsible for financing the local delivery of these public services
through intergovernmental transfers. LGAs‟ exclusive expenditure responsibilities include local
land use planning, sanitation, public markets, and other such local amenities. LGAs are also
exclusively responsible for local administration (LGFR 2007: 5). Delegated functions are funded
by earmarked ministerial subventions to the LGAs.

Table No. 9: Assignment of expenditure responsibilities in Tanzania

Source: Backgroung Paper on Local Government Finance – The Framework for the Financing of
Local Governments in Tanzania
Overall, 21.4 percent of public spending is budgeted to take place at the local government level
(Table 10). This share might be considered relatively low, considering that LGAs are responsible
for delivering some of the most important pro-poor public services in Tanzania, including
primary education, basic health services, agricultural extension, local road access and rural water
Table No. 10 Central and local government’s budgets 2006/07

Recurrent spending in Tanzania (Table 11), is considerably more decentralized than the
development budget (24.35% for recurrent and 16.95% for development) and trends indicate a
steady increase over the last three years in the local governments‟ share of recurrent spending
from 17 percent in FY 2004/05 to over 24 percent in FY 2006/07 (Table 12). The increase in
local share of recurrent spending has largely been driven by the relatively high public sector
wage increases in recent years. Two-thirds of Tanzania‟s public servants work at the local level.

Table No. 11: Expenditure decentralization in Tanzania: Recurrent public expenditures by
               Central and local governments, FY 2001/02 – FY 2006/07

The degree of autonomy of local government entities to collect and manage their own fiscal
revenue (including rates and the fiscal base):
Despite Tanzania‟s commitment to fiscal and administrative decentralization, LGAs have very
limited expenditure autonomy and very limited control over local personnel. LGAs have to get
approval from the President‟s Office – Public Sector Management Department of the central
government to fill in vacant posts (LGFR 2007: 6). The level of fiscal autonomy of the LGAs
and their discretion to set local expenditure priorities continues to decline (Table 4). A study of 9
cities has revealed for example that although urban authorities are slightly better off than rural
district authorities (Table 12), they also are becoming less self-reliant in revenue. Collectively,
local revenue in the 9 cities declined from 30.8 percent of total revenue in 2005/2006 n to 26.4
2006/2007and 28.7 in 2007/2008 (Fig. 6).

Source: Tanzania State of the Cities Report – Background Studies, 2009
The right to receive credit:
The law empowers LGAs in Tanzania raise loans, subject to the approval of the Minister
responsible for Local Government; which is given after consulting with the Minister responsible
for finance. The LGAs can, with the permission of the Minister, obtain advances or over drafts
from banks but it should not exceed their income in the previous fiscal year. LGAs are not
allowed to raise loans from outside of the United Republic of Tanzania. There is a Local
Government Loans Board (LGLB) that provides loans to LGAs on concessionary terms. The
LGLB is primarily financed from contributions by all LGAs. Borrowing, however, constitutes an
insignificant proportion of revenues of the LGAs (Table 8).

Revenue collection duties for other entities of the state:
LGAs in Tanzania collect revenue for some entities of the state and non-state sectors, including
revenue on income tax deducted from salaries of the council employees which they collect on
behalf of the Tanzania Revenue Authority; land rent which is collected on behalf of the Ministry
of Lands and Human Settlements Development; returns from community members within their
areas of jurisdiction on behalf of special funds such as the Youth Development Fund, Women
Development Fund and the Agriculture and Livestock Development Fund; revenue on statutory
and voluntary contributions; and deduction for insurance schemes, pension funds, cooperative
societies, labour unions and other workers organizations; recovery of loans and advances to
employees on behalf of banks, hire purchase and other private sector financial institutions; and
community contributions to various participatory projects on behalf of the government, donors
and other funding agencies.

Intervention of development partners in decentralization:
Development partners play an important role in financing of development projects in Tanzania,
mainly through the Common Basket Funding mechanism and also through the General Budget
Support (GBS) mechanism. As such direct funding by development partners to LGAs is small
and insignificant. The central government is required to contribute counterpart funding by a
certain percentage of the funds provided by development partners. When individual LGAs
finally receive them, the funds comprise both contributions of development partners and of the
Financing from bilateral development partners is largely in the form of assistance while that from
multilateral partners, especially from the World Bank is on loan basis. Generally, the
intervention of the financial partners has had several positive impacts in decentralization. Apart
from providing crucial resources needed by LGAs to invest in physical infrastructure and to
improve the quality of public service delivery, the requirement by development partners for
government counterpart funding has contributed to the increase in the proportion of the
government development budget allocation to LGAs. Development Partners‟ stringent
requirement for accounting and reporting on the funds has also contributed to higher levels of
accountability and transparency in the LGAs thus enhancing the trust of citizens and the central
government on them.

   c) Analysis of the added value in terms of access to basic services

Consequence of the decentralization process on the effectiveness, relevance, quantity,
quality, efficiency and inclusiveness of service delivery (provide case studies)

Decentralization has led to an increased efficiency and improved delivery of key public services
like education, water supply and health services, where there is community participation (URT
2008: 111). Increased public participatory has ensured local ownership, enhancing sustainability
of the projects. Besides, decentralized decision-making has ensured that resources are used
effectively to address local concerns because priorities are determined locally by the stakeholders
and as a result the projects that are implemented are more relevant to local situations and
responsive to local needs. Decentralization has made it possible for LGAs to augment limited
public resources through contributions by communities, CSOs and private sector institutions that
have broadened their capacity to address development and service delivery constraints by
increasing the quantity of goods and services delivered. Improvements have also been made in
the quality of local financial management and in the transparency of local government finances
in recent years (LGFR 2007: 4). A report of the Controller and Auditor General (CAG) which
was produced in June 2005 shows for example that more councils than before have received a
„clean‟ statement on their accounts” Einar Braathen et al, 2005:5). A Citizens‟ Survey done in
six LGAs in 2005 revealed that “the majority (54%) of the respondents have seen an
improvement in local government service delivery over the past two years, although there are
differences between the councils” (Einar Braathen et al, ibid: 6).
What were the achievements and limitations of the process of decentralization (democracy,
power relations, inequalities, social inclusion, poverty reduction and growth enhancement,
tax revenue utilization, gender equalities) – (provide case studies to illustrate your analysis)

Tanzania launched the Local Government Reform Programme (LGRP) in 2000 which aimed at
building the capacity of LGAs to assume greater responsibilities, ensure more efficient service
delivery and exercise more extensive control over their resources. Ideally it was intended that the
role of sector ministries would be limited to providing technical guidance on sectoral issues,
setting relevant sector policies and legislative guidelines for LGAs, determining sector specific
service delivery standards, and monitoring performance. The inter-sectoral ministries were
expected to reduce the extent to which they determined the composition and allocation of
resources available to the LGAs.

Implementation of Phase one of the LGRP was concluded in June 2008. After eight years of
operation the LGRP has not been able to realize many of its objectives. The Joint Government-
Donor Reviews (2002; 2004 and 2006) have consistently shown that significant progress in the
reforms had been made at LGA level but that very little has been achieved in terms of fiscal
decentralization, mainly due to resistance within the central government against devolving
powers over fiscal and human resources to the LGAs. The LGAs therefore, continue to have
limited control over local expenditure reflected by a limited degree of revenue autonomy and by
centralized control over local public servants. LGAs continue to operate without the requisite
autonomy and key decisions continue to be made by the national government, ignoring unique
local needs and priorities.

   d) Identifiation and analysis of the opportunities, challenges and lessons learnt.

Are there conflicts between central and local governments? (Provide case studies if any)

Conflicts exist between the central government and LGAs largely because the central
government appears to be retracting on some earlier commitments to decentralization by
devolution. While D by D appears to have taken root in the LGAs, many central government
agencies are reluctant to release resources, power and authority to them and continue issuing
many directives to the LGAs. The Joint Government-Donor Review of LGRP (2004) pointed out
for example, that in spite of the progress made in enhancing good governance, civic education
and restructuring at LGA level, “there has been little progress on realizing the “government
commitments to achieve tiers of autonomous sub-national government through D-by-D.” As
such, “most local government agencies are more or less mere agents of central government”
(Mhina 2007: 9). Besides, LGAs lack authority over crucial utilities and services which were de-
concentrated to central government agencies and regulatory authorities. Tenders for works or
services have been awarded by these agencies that conflict with local by-laws or development
plans. Central government authorizes the allocation of village land to individuals in areas
reserved for urban expansion without consultations with the LGAs.

Do local authorities face any difficulties in fulfilling their mandates? (What is the source of
such difficulties?) (Provide Case studies if any):

LGAs face many difficulties in fulfilling their mandates largely because they do not have
adequate financial, material and human resources. Key staffing challenges in the LGAs include
lack of qualified personnel to fill in various key posts which fall vacant such, understaffing in
some key departments, low morale due to low salaries and lack of other incentives leading to
high rates of attrition of qualified and experienced staff who search for better rewarding posts in
the central government and in the private sector. LGAs also have to submit numerous reports to
the central government in a variety of formats, which stretches further their limited resources.
Improving the provision of services; ensuring that all shifted activities are allocated with
sufficient resources; and linking and simplifying various ways used to transfer financial
resources to the LGAs are the main challenges emerging from the decentralization process.

Capacity building needs at both the national and local government levels:
The capacity of LGAs needs to be built for them to implement the responsibilities which have
been shifted from the central government efficiently. Elected leaders and appointed officials at
the council and lower levels LGAs have received training with in the crucial areas of planning,
budgeting, performance monitoring and financial management, mainly by national institutions.
Some international organizations have provided additional training for capacity building of the
LGAs to create local development plans which make use of local resources and which conform
to the needs of their respective citizens (JICA 2008). Capacity building in the LGAs is a
continuous because of high staff turn over rates in the LGAs and also because of regular changes
in the LGAs political leadership after every five year election term. Capacity building should be
delivered through training courses and seminars, workshops and study tours. At the central
government level and particularly in the Prime Minister‟s Office, Regional Administration,
capacity development should aim at improving coordination, monitoring and evaluation and
skills in policy analysis. The key lessons learnt are that capacity development for decentralized
governance is a continuous process and that there should be equal focus on both the central and
local government levels.


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