Establishing Local Revenue Generation Systems ensures provinces are able to finance devolved service delivery functions without total reliance on Federal government funding. Revenue generation activities include: 1) developing fiscal policy; 2) forming Revenue Generation Units (LRUs); 3) conducting economic-based line studies; and 4) developing laws and processes for utilizing, managing, evaluating, and auditing the system. GSP/Taqadum has been training provincial governments on the guiding principles, structures, and collection mechanisms for user fee and other revenue collection. This includes taking steps to create a favorable legal environment able to direct payments and conduct public surveys that determine the willingness of constituents to pay for clearly identified services. Project staff has been supporting provincial governments in analyzing the national and provincial legal frameworks governing revenue generation by providing a “road map”, and assisting them in drafting local and national laws to establish local user-fee collection, management, and enforcement systems.
The Revenue Generation System will provide provincial governments with a transparent means to collect and spend local revenue to meet community service needs. This system will also make local government more accountable to its citizens. Having a Local Revenue Generation System in place – even a surcharge system – and having access to local revenue will increase accountability of provincial governments to their citizens. The service delivery incentives facing provincial governments may improve if they have to raise their own revenues through tax or user fee increases, rather than relying on Federal transfers. In the long run, in addition to increasing accountability, Local Revenue Generation Systems will reduce the blame attributed to the Federal government for poor service delivery.
Understanding the importance of Local Revenue Generation as a means to support service delivery, accountability, and citizen satisfaction, GSP/Taqadum’s Local Financial Management approach calls for the establishment of Local Revenue Units (LRUs) responsible for reporting on, financially managing, and eventually collecting local revenues from within each provincial Governor’s Office (GO).
Continue to assist PCs in their review of Local Revenue Legislation drafts received from the Governor’s Offices to ensure they are in accordance with the GSP/Taqadum-proposed Local Revenue Legislation template
Assist the newly added Directorates to identify new local revenue opportunities in accordance with Article 25 of the 2016 Federal Budget Law
Continue to assist local governments in the development of a Local Revenue System including: collection methods, revenue management, and annual review of rates
Continue to provide on-the-job training to LRUs and work with the newly added directorates staff on Local Revenue Management
Assist provinces to set mechanisms to implement Article 44 of Law 21, as amended