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Thursday, July 25, 2024

Liberia: Expenditure Assignment: The Missing Piece of Liberia’s Decentralization Reforms

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Thomas B. Kanneh

Following the end of its devastating civil wars in the 1990s and early 2000s, Liberia embarked on a path toward decentralization and local governance, after over a century of highly centralized rule.

In 2018, efforts to decentralize governance culminated into the passage of the Local Government Act (LGA). The LGA establishes a legal framework for fundamentally restructuring power relations by devolving some administrative and fiscal authority from the central government to newly-established local governments.

However, a major gap remains that undermines accountability – the LGA does not clearly assign expenditure responsibilities that define the functional service delivery roles of each level of government.

Liberia’s history has been marked by extreme concentration of political and economic power in the capital – Monrovia – which was, for 133 years after independence, under the dominance of a settler minority who descended from the United States of America.

After declaring independence in 1847, the settler elite entrenched a system of centralized rule that systematically marginalized and exploited the indigenous African populations of the interior, stoking resentments that ultimately fueled the civil conflict.

In the aftermath of Liberia’s ruinous civil wars from 1989-2003, the transitional government and subsequent administration of former President Ellen Johnson Sirleaf (2006-2018) recognized decentralization as critical for rebuilding state capacity, service delivery, and promoting more equitable and inclusive development.

As a result of resistance to outright devolution of power, Sirleaf’s team launched initiatives to deconcentrate basic services to the subnational level. She was ultimately unable to get a comprehensive local governance law passed until she left office in January 2018.

The LGA (signed into law by former President George M. Weah on September 19, 2018) and its complementary revenue-sharing law (signed in 2022) are landmark achievements, which have established a framework for devolution of powers to local governments as well as fiscal decentralization through intergovernmental revenue sharing and local taxation.

However, in a major oversight resulting from legislative pressure to shorten the local government bill (when it was in the National Legislature), the sections detailing the expenditure assignments to specify the service delivery responsibilities of each level of government were removed.

The lack of clear expenditure assignments continues to undermine Liberia’s decentralization efforts and local governance reforms years after the LGA’s passage.

Without clarity on the division of functional expenditure roles, fiscal resources could flow to local governments in an accountability vacuum. Local authorities would have funds but lack a defined mandate, while citizens would be unable to hold any level of government responsible for delivering specific public services and investments.

Clearly delineating expenditure responsibilities between national and local governments is therefore essential for operationalizing Liberia’s legal decentralization framework.

Expenditure assignments establish transparency around the functional service delivery and investment roles of each tier of government, strengthening accountability mechanisms.

With expenditure assignments, local governments have a defined sphere of responsibilities that citizens can monitor and evaluate. The national government maintains its roles in policy, regulation, and funding of decentralized functions. Both levels (national and sub-national) can be held to account.

To address this critical gap, the Government of Liberia needs to undertake the process of expenditure assignments based on established principles and methodologies for functional, fiscal, and administrative decentralization reforms.

This exercise should be spearheaded by the Governance Commission as the lead institution for decentralization policy in Liberia.

The Commission should work in close coordination with the Ministries of Internal Affairs and Finance and Development Planning alongside all other ministries, agencies, commissions and other stakeholders (development partners, civil society, etc.) to deliver on this assignment.

The expenditure assignment process should be guided by core principles like subsidiarity – providing public services at the closest capable level of government – and ensuring economies of scale for cost-effective service delivery. A normative five-step approach for expenditure assignments in Liberia is outlined below:

Explicitly define the goals and scope of the expenditure assignment exercise

Organize the institutional arrangements, processes, and participation procedures

Comprehensively map all existing expenditure functions across national and local levels

Review proposed expenditure assignments through an intergovernmental vetting process

Effect the legal transfer of expenditure responsibilities through regulatory reforms, capacity building, asset transfers, accountability mechanisms, and monitoring systems

Carrying out this systematic exercise to assign expenditure responsibilities is politically complex but vital for Liberia to fully operationalize its legal decentralization framework and promote transparent, democratic local governance, and development.

With clear expenditure assignments, fiscal decentralization policies like intergovernmental transfers and local revenue mobilization can be firmly linked to locally-defined service delivery and investment roles. Both local and national authorities can be held accountable by citizens for their respective functional mandates.

Author: Thomas B. Kanneh is a trained macro-fiscal economist. He is a development professional with over 11 years of work experience in Liberia and Uganda. Between 2016 and 2022, he worked on varying governance reforms in Liberia.

He holds a master degree in policy economics (expected August 2024) from the University of Illinois, Urbana-Champaign, Illinois, USA; a master of international development policy (taxation and public financial management) from Duke University, Durham, North Carolina, USA; and a master in public policy from O. P Jindal Global University, Sonipat, Haryana, India.

For a full paper on the proposed steps for the assignment of expenditure responsibilities, Thomas can be

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