New fiscal manual: A step in the right direction

ECONOMISTS have praised Zimbabwe’s efforts to enhance transparency and accountability in local authorities with the launch of a new fiscal transfer system administration manual.

However, they emphasised that this single step is not enough to eradicate corruption.

The Zimbabwe intergovernmental fiscal transfer system administration manual, launched last week, seeks to empower local authorities and central government to manage fiscal grants more effectively, promoting a more accountable and transparent system

“The manual is an important step in the fight against corruption within councils but it has to be complimented by other measures. It will not be sufficient on its own,” economist Prosper Chitambara said.

“There is a need to come up with other supplementary measures to be implemented holistically to address that cancer of corruption. It is an important step but more needs to be done.”

United Kingdom-based economist Chenayimoyo Mutambasere suggested establishing an independent committee to oversee the formula, ensuring objective decisions based on local needs.

“The intergovernmental budget transfer formula presents several areas for improvement to ensure fairness, efficiency and responsiveness to local needs,” she said.

“Looking at the independent oversight and policy formulation, the current issue is that the Office of the President and Cabinet is responsible for devolution, oversight and revision of the formula. This centralisation can lead to political patronage and influence, undermining the objectivity and effectiveness of the process.

“There is a need to establish an independent committee for policy formulation, oversight, and evaluation. This committee should be insulated from political influences to ensure decisions are based on objective criteria and the genuine needs of local authorities.”

Mutambasere recommended an annual review of the manual to respond to changing demographics and economic conditions, emphasising the need to broaden the criteria on social protection, healthcare, education and infrastructure development.

“I would recommend the implementation of an annual review of the formula to accommodate rapid changes in demographics, economic conditions and infrastructure needs. This ensures that allocations remain relevant and responsive,” Mutambasere said.

“This holistic approach ensures that all essential services are adequately funded.”

She also suggested that the government implements needs-based adjustments rather than equal allocation of funds to further development.

“The current issue of accounting for the varying needs of urban local authorities is an equal base allocation and may not adequately address the diverse needs and capacities of different urban local authorities. Larger cities with extensive infrastructure needs might require more funding than smaller towns,” she explained.

“There is a need for needs-based adjustments. While maintaining an equal base allocation, incorporate a needs-based adjustment factor that considers specific urban challenges such as infrastructure deficits, economic activity levels, and growth rates.”

Mutambasere said the government should implement performance-based incentives to encourage efficient management and innovative solutions among local authorities.

“The government also needs to support rapidly growing urban areas as urban areas experiencing rapid growth may face increasing needs that an equal base allocation might not sufficiently address, leading to underfunding of essential services and infrastructure,” she added.

“There is a need to implement growth-based adjustments to the base allocation to support urban areas with increasing demands, ensuring they receive adequate funding to meet their expanding needs.

“Other recommendations for improvement include the need for stakeholder consultation. Government should engage urban local authorities in discussions about the allocation formula to ensure it meets their needs.”-newsday