African State Governance

Subnational Politics and National Power

A. Carl LeVan, Joseph Olayinka Fashagba, Edward R. McMahon, A. Carl LeVan, Joseph Olayinka Fashagba, Edward R. McMahon

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9781137523341
• Topic: Ciencias sociales
• Subtopic: Sociología

Africa is changing and it is easy to overlook how decentralization, democratization, and new forms of illiberalism have transformed federalism, political parties, and local politics. Chapters on Kenya, Nigeria, Ethiopia, and South Africa help fill an important gap in comparative institutional research about state and local politics in Africa.

Section I

Nigeria in Comparative Perspective

1

Lessons in Fiscal Federalism for Africa’s New Oil Exporters

Rotimi T. Suberu

Can fiscal and political decentralization help to circumvent or cauterize the problems of predation, authoritarianism, internecine conflict, social inequity, economic underperformance, and other governance failures that plague Africa’s neo-patrimonial states in general and natural resource-dependent countries in particular? This chapter explores that question by distilling lessons from the experience of Nigeria, Africa’s largest oil producer, biggest economy, most populous country, and long-standing decentralized federal polity. Nigeria has granted extensive policy autonomy and fiscal resources to its subnational governments with some salutary effects, but without escaping the resource curse or attaining robust developmental or democratic governance. The chapter explores challenges and pathologies in the design of Nigerian fiscal decentralization that may account for the country’s predicament. Additionally, it explores the experiences of Ghana and Kenya, two new or prospective African oil exporters that have instituted significant experiments in good oil revenue governance and/or political decentralization.

The chapter begins with an examination of the potential roles of decentralized institutions and fiscal federal constitutions in neo-patrimonial, natural resource-dependent, African settings. It then assesses six aspects of the design and performance of Nigeria’s fiscal decentralization (vertical fiscal inter-governmental relations, horizontal fiscal relations, conflict resolution institutions, resource management rules, democratic political processes, and fiscal or constitutional reform agendas) before reviewing these same issues in the Ghanaian and Kenyan contexts.

The analysis highlights some of the positive lessons and many of the negative aspects of Nigeria’s fiscal and political decentralization. The major achievement associated with fiscal federalism in Nigeria is the relatively balanced and durable accommodation of national and subnational resource-sharing claims, leading to the extensive decentralization of revenues and responsibilities to subnational governments. But Nigeria’s fiscal and political decentralization has been disfigured by multiple pathologies arising primarily from the absence of strong institutional mechanisms linking the devolution of oil revenues to efficient revenue management or effective social service delivery by subnational governments. Although Ghana and Kenya have instituted reforms that address some of the Nigerian pathologies, the collective experience of these three countries suggests that African states still face enormous challenges in designing truly decentralized, democratic, and developmental polities.

Decentralized institutions and natural resource governance

The scholarly literature suggests that decentralized institutions, including those that are federal, can be especially apt for reforming ethnically fractious, politically unstable, and economically underdeveloped states. The grant of autonomy to territorial subunits in multiethnic states, for example, can empower and appease ethnic minorities, transforming them from national minorities into subnational majorities. Such territorial autonomy can also compartmentalize or quarantine conflicts in individual territorial subunits of the state, generate potentially crosscutting intra-ethnic competition in ethnically homogeneous subunits, promote inter-ethnic cooperation and political socialization in more ethnically heterogeneous subunits, reduce ethnic or horizontal inequalities through schemes for inter-regional redistribution or equalization, and stimulate alignment on non-ethnic issues as regions controlled by different ethnic groups coalesce or forge functional lines of cooperation to defend their collective interests against central authorities (Horowitz 1985).

Decentralization can promote, deepen, and broaden democracy by facilitating citizen engagement at subnational or local levels, by enhancing the accountability and responsiveness of government to citizens, by making government more representative of the diversity of the population, by furnishing checks and balances on the powers of the central state, and by providing opportunities for the political opposition at the national level to exercise power at the subnational level and thus to acquire a direct stake in the development of the democratic political system (Diamond 1999). And decentralization can engender economic efficiency and prosperity through inter-jurisdictional or inter-governmental competition. Indeed, the most economically dynamic and prosperous countries in the world today are either full-fledged federations or, like China, highly decentralized unitary states. This is because, as claimed by the theory of market-preserving federalism (Weingast 1995), competition between subunits for capital and labor can reduce corruption and mismanagement, stimulate innovation and experimentation, and generate a credible political commitment to ‘limited government’ and the preservation of productive private economic activity. Yet, reflecting their centripetal political economies, which constrain genuine economic decentralization, and centrifugal ethnic dynamics, which limit inter-regional mobility of persons and skills, African nations have seen no serious example of market-preserving inter-governmental competition (Dickovick and Riedl 2010).

Indeed, much current literature on politics in the developing world suggests that decentralized governance can often fail to fulfill its advertised potential for promoting ethnic conflict management, democratic development, and economic progress. Rather, decentralization in these settings may face an array of challenges that can exacerbate inter-group conflicts, impede democratic governance, and complicate macroeconomic management. This is especially the case in resource-dependent countries of the developing world, where decentralization may simply aggravate the resource curse syndrome, producing violent inter-group conflicts, predatory and corrupt governance, and socio-economic underdevelopment and inequality.

In essence, decentralization is neither inherently beneficial nor baneful. Rather, a lot much depends on the particular design and context of decentralist political and fiscal institutions. The success of decentralization in resource-dependent states in particular will require the judicious design of institutions to respond to multiple critical challenges that span the four intermediate goals (legal or constitutional authority, fiscal and political autonomy, downward and upward accountability, and institutional and technical capacity) and three overarching objectives (stability, democracy, and development) of decentralization (Dickovick and Riedl 2010). Focusing on the distributional politics of decentralization, rather than its more technical and economistic aspects, we can identify six critical challenges of fiscal federalism and decentralization as follows:

1.		Crafting a viable vertical balance in the distribution of resource revenues and other fiscal resources between national and subnational orders of government in contexts that are especially prone to political and economic hypercentralization.
2.		Incorporating judicious arrangements for the equitable horizontal (inter-regional or inter-unit) distribution of revenues from natural resources, including the accommodation of the environmental and socio-economic needs of oil-bearing and/or oil-impacted regions, jurisdictions, or communities.
3.		Establishing legitimate institutions (including revenue sharing commissions and judicial tribunals) for the neutral administration, arbitration, adjudication, or brokerage of competing inter-governmental and/or inter-regional resource claims.
4.		Ensuring judicious economic management at all levels of the inter-governmental system.
5.		Ensuring that the system of fiscal and political decentralization expands rather than constricts opportunities for subnational political participation and accountability.
6.		Creating appropriate processes for the reform or adjustment of inter-governmental resource revenue sharing arrangements in response to changing political and economic dynamics.

These six issues have featured to varying degrees in debates about decentralization and oil revenue management not only in the established oil-producing state of Nigeria, but also in the emerging oil-producing countries of Ghana and Kenya. These three countries share certain features that make a discussion of their experiences potentially insightful. Aside from the fact that they have continued to experience active and intense debates on the management and allocation of natural resource revenues, the three countries share a common British colonial legacy, a history of politicized ethnic, regional, and/or religious fractionalization, and a broad commitment to political decentralization, in the context of either a unitary constitutional architecture (Ghana) or a federal (Nigeria) or quasi-federal (Kenya) political system.

The three countries, of course, differ significantly in the magnitudes and timing of their oil production. Nigeria is a mature and established oil producer, having discovered its first commercially viable oil in Oloibiri in the Niger Delta in 1956. Today, Nigeria is among the world’s top ten oil producers, with a production capacity of 3.23 million barrels of oil per day (bpd) – although actual production is only 2.5 million bpd due to Nigeria’s ethno-political and policy instability – and proven oil reserves of 37.2 billion barrels (KPMG Africa Limited 2013). Nigeria is also heavily dependent on its hydrocarbon sector, which accounts for approximately 95 percent of export revenues, 80 percent of public finances, and 15 percent of GDP.

Although a long-standing and major producer of gold, Ghana discovered commercially viable oil reserves only in June 2007 in the Jubilee Field (so named because the discovery coincided with Ghana’s 50th independence year) offshore the c...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright
• Contents
• List of Tables
• List of Figures
• Preface
• Notes on Contributors
• Introduction: Subnational Legislative Politics and African Democratic Development
• Section I: Nigeria in Comparative Perspective
• Section II: New Institutional Frontiers in Federalism
• Index