Municipalities and Finance: A Sourcebook for Capacity Building

IN THE CURRENT discourse on development, the role of local government as enabler has been given increasing attention in response to increasing decentralization. The issue of how local governments can actually increase their capacity to engage with low-income communities in order to implement effective change is, however, not so widely addressed. Municipalities and Finance explores the role which an understanding of financial constraints and of methods to build financial capacity play in municipal governments’ ability to deliver pro-poor services.
The book first establishes a straightforward framework for evaluating a municipal government’s current capacity through a discussion and analysis of its financial management, the external constraints and an understanding of staff development. It continues by exploring the need for setting realistic financial goals through strategic decision-making, the creation of enabling frameworks and the facilitation of internal change.
The second matter addressed is that of financial mobilization through tax revenues. Through a discussion of local taxation and poverty reduction, the authors analyze the role of taxation reform and the associated effects on collection enforcement, while also presenting various methods for improving tax assessment and coverage. Questions of equity and its relation to charging the poor are then explored in relation to different policy options. These options focus on improving governments’ capacity to charge, minimizing corruption and assessing the willingness and ability of the poor to pay.
In this context, the improvement of municipal financial capacity becomes firmly established within the urban development discourse. Intricacies of efficient municipal budgeting processes are discussed, while the role, structure and popularity of participatory budgeting are also recognized. Issues of controlling costs are discussed, and the methods that can be employed in doing so.
The final chapters look at the sustainability of the recommendations made, and emphasize the reform of accounting practices and financial investments. The book concludes with a comprehensive framework for use by municipal governments, which summarizes key questions and issues.
The discussion of the topics presented in the book is based largely on innovative practices in India, Brazil, Kenya and Uganda. Case studies are used throughout to draw attention to the real life applicability of the different options presented and the viability of establishing strategic frameworks that increase municipal governments’ capacity while simultaneously working for the urban poor.