AN ASSESSMENT ON THE IMPACT OF FINANCIAL AUTONOMY ON THE GROWTH OF MUNICIPAL COUNCILS IN CAMEROON

CHAPTER ONE

INTRODUCTION

Background of the study

The local councils in all regions of Cameroon are playing a very important role in the provision of crucial public services. Nevertheless, the local development authorities encounter significant obstacles in effectively addressing the demands of the community. Due to rapid and disruptive urbanisation, as well as the recurring natural catastrophes caused by climate change, municipal authorities in developing nations, particularly in Africa,, are confronted with increasingly difficulties. The primary challenge for many local authorities, especially those overseeing towns in emerging nations, is the widening disparity between the availability of financial resources and the need for municipal investments.

Undoubtedly, the primary cause of the growing fiscal deficit is the rapid growth of urban populations, which is leading to a higher demand for public facilities, modern infrastructure, and its upkeep. According to Bojanic, (2018). there is a difficulty in transferring revenue from the central government to local authorities [Bojanic, 2018]. This is because the primary source of funding for most significant development efforts in underdeveloped countries is central government transfers, supplemented with reduced income from land taxes and operating costs. National governments often oversee the regulation of very lucrative sources of revenue that are considered ideal for financing metropolitan and local municipalities, including income taxes, property taxes, and company taxes. As stated by (Smoke, 2015) municipal councils have the potential to receive revenue from property taxes and utility charges. However, central policymakers frequently avoid implementing substantial tax increases due to concerns about losing political support from the metropolitan population. They may even oppose such increases to avoid electoral opposition from local taxpayers. [Murana, 2015]. As a result, there are significant disparities in the distribution of restructuring responsibilities and available fiscal resources at the regional level in the majority of nations. Many central governments are hesitant to incur the political and financial burdens of decentralising roles and responsibilities [Amusa & Mabugu, 2016]. Nevertheless, nations that have attempted to decentralise the fiscal process, such as Cameroon, have encountered challenges throughout the implementation phase. The administration of municipal councils in Cameroon plays a crucial role in providing vital services to the local people and fostering local economic growth. The financial independence of municipal councils is a crucial element of local government that directly influences the progress and advancement of these councils. Financial autonomy pertains to the capacity of municipal councils to autonomously produce, administer, and distribute financial resources in order to successfully meet the demands of their constituents. 

Evidently, the decentralisation process in Cameroon has been in progress since the early 2000s, with a series of legislative measures that seek to provide more authority to local government institutions (Igbinosa, 2016). Notwithstanding these efforts, obstacles concerning fiscal independence remain, impacting the efficiency and efficacy of local governing bodies. The difficulties include insufficient income streams, excessive dependence on payments from the central government, and restricted ability for financial management and planning. Municipal councils may face limitations in their capacity to make prompt and strategic expenditures in crucial areas such as infrastructure, education, health, and local development due to a lack of financial autonomy (Igbinosa, 2016). Furthermore, it may impede councils from enacting policies and programmes specifically designed to meet the unique requirements of the local community, so restricting their ability to effectively address urgent community concerns. On the other hand, granting more financial independence to municipal councils might enable them to make more targeted investments in local priorities, better address the needs of the community, and promote economic development at the local level. These activities may include efforts to bolster local enterprises, boost infrastructure, and augment social services, so fostering sustainable development and alleviating poverty (Olasunkanmi, Banna, Kazeem, Bukola, 2019). Nevertheless, the connection between financial autonomy and the expansion of local councils in Cameroon remains incompletely comprehended. This research aims to examine the influence of financial autonomy on the development of municipal councils in Cameroon in order to get a deeper understanding of the difficulties and advantages related to granting local governments more financial control. The research seeks to examine this link in order to provide valuable insights that may assist policymakers in devising and executing efficacious ways to bolster the financial independence of municipal councils. Consequently, this may enhance the sustainability of local government and development results across Cameroon. Therefore, the resercher sought to assess the impact of financial autonomy on the growth of municipal councils in Cameroon.

1.2 Statement of the problem

Municipal councils in Cameroon have substantial obstacles in attaining sustainable growth and development. A possible hindrance is the absence of financial independence, which might restrict their capacity to efficiently create and oversee resources for local development endeavours. If municipal councils rely largely on financing from the central government or do not have the power to choose local tax rates and control their own budgets, they may face limitations in their capacity to address community needs and make investments in infrastructure and public services (Nkurunziza & Niyobuhungiro, 2020). Municipal councils may have difficulties in addressing urgent problems such as poverty, unemployment, and insufficient public services if they lack sufficient financial autonomy. These challenges might impede local growth and development (Balgah & Shu, 2019). An essential aspect of assessing the progress of municipal councils in Cameroon is comprehending the influence of financial autonomy. This understanding is vital for pinpointing specific areas that need policy modifications or efforts to enhance the capabilities of local governments and foster sustainable economic development (Mbacham, 2021). Hence, the study  assess the impact of financial autonomy on the growth of municipal councils in Cameroon.

1.3 Objective of the study

The broad objective of the study is to assess the impact of financial autonomy on the growth of municipal councils in Cameroon. The specific objectives is as follows

Evaluate the extent of financial autonomy of municipal councils in Cameroon.

Investigate how financial autonomy correlates with the growth of municipal councils.

Determine the challenges faced by municipal councils in achieving financial autonomy in Cameroon.

1.4 Research Questions

The following questions have been prepared for the following

What is the extent of financial autonomy of municipal councils in Cameroon?

How does  financial autonomy correlates with the growth of municipal councils?

What are the challenges faced by municipal councils in achieving financial autonomy in Cameroon?

1.5 Significance of the study

The findings of the study will be significant to the following

Policymakers: The study's findings can guide policymakers in making informed decisions regarding the decentralization of financial control to local governments. It can identify best practices and highlight areas where policy adjustments are needed to optimize financial autonomy and support municipal growth.

Academic Contribution: The study will contribute to the body of academic research on local governance and municipal finance, particularly in the context of Cameroon. It can serve as a foundation for further research on the broader impact of financial autonomy on local governments and their communities.

1.6 Scope of the study

The study focuses on the impact of financial autonomy on the growth of municipal councils in Cameroon. Empirically, the study will evaluate the extent of financial autonomy of municipal councils in Cameroon, investigate how financial autonomy correlates with the growth of municipal councils and determine the challenges faced by municipal councils in achieving financial autonomy in Cameroon.

1.7 Limitation of the study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview), which is why the researcher resorted to a moderate choice of sample size. More so, the researcher will simultaneously engage in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.8 Definition of terms

Financial Autonomy: Financial autonomy refers to the ability of municipal councils to independently generate and manage their financial resources without undue external interference. This includes the power to collect taxes and fees, allocate budgets, and make spending decisions that align with local priorities.

Municipal Councils: Municipal councils are local government bodies responsible for the administration, governance, and development of a specific geographic area within a country. They manage local affairs, including public services, infrastructure, and community development.

Growth: In the context of this study, growth refers to the advancement and development of municipal councils. This can include improvements in economic performance, infrastructure, public service delivery, and overall quality of life for residents.

Revenue Generation: Revenue generation is the process by which municipal councils collect funds from various sources such as taxes, fees, grants, and other financial mechanisms. These funds support local development projects and the delivery of public services.

Local Governance: Local governance encompasses the systems, processes, and policies through which municipal councils administer public services and make decisions for the benefit of the local community. It includes the relationships between local government officials, citizens, and other stakeholders.

Decentralization: Decentralization refers to the process of transferring authority, responsibilities, and resources from central government to local government bodies. This can involve granting municipal councils greater control over their finances and decision-making processes.

Infrastructure Development: Infrastructure development involves the construction and maintenance of essential public facilities and services such as roads, bridges, water supply, and sanitation systems. These projects are vital for supporting the growth and well-being of a municipality.