Despite the many potential benefits of decentralization, the stakeholders most responsible for championing decentralization reforms—elected national politicians and national-level bureaucrats—often face diverse incentives to pursue, to appear to pursue, and even to limit decentralization reform (Eaton, Kaiser and Smoke 2011).
Decentralization, when implemented under the right circumstances, in a careful and balanced manner, has the potential for long-term benefits to the country as a whole. But, in the short-run, it requires different national-level ministries to give up some of their power and control over resources. For analytical purposes, it is useful to distinguish between the motivations facing elected politicians at the central government level, and the motivations and incentives being faced by appointed central bureaucrats tasked with representing specific government departments or units. Politicians have to deal with electoral, partisan, institutional, and coalitional incentives and constraints; bureaucrats are primarily concerned about advancing narrower institutional powers and interests; improving career trajectories for themselves and their teams; and preventing rival agencies from interfering in their responsibilities, powers and resources.
Despite the long-term benefits, then, why would elected political leaders and national-level bureaucrats pursue decentralization reforms if this means giving up power and control? Indeed, in practice, we often see that central government stakeholders are not fully committed to decentralization:
- The extent of political decentralization may be limited, or local governments may not be meaningfully empowered over functional responsibilities. For instance, the Constitution or Decentralization Law may be approved by parliament but, in reality, not meaningfully implemented, or there may be extensive conflicts between the decentralization law and sectoral laws as to the actual role of local governments in key sectors. In other cases, elected local bodies may be introduced without being given authoritative decision-making power, so that local plans and decisions may still need to be approved by the central government, and can still be arbitrarily changed by higher-level officials.
- The decentralization of administrative powers may be limited. Similarly, despite functional assignments in the constitution or legal framework, sector ministries may, in practice, retain effective control over key sectoral functions. In fact, it is not uncommon for higher-level governments to have full (or nearly full) control over local government staff that is responsible for the delivery of legally devolved local public services as pertains in India, Sierra Leone, and Tanzania.
- Even in places where political and administrative powers and functions have been devolved, central authorities can retain substantial control over the local public sector simply by failing to decentralize adequate fiscal powers and resources. Starved of financial resources, the central government can introduce highly earmarked grants to micro-manage local decision-making, or simply declare local governments incapable of delivering services and allow sector ministries to retain or retrench the de facto responsibility for frontline service delivery. This de facto degree of control can vary significantly from sector to sector.
Furthermore, within the central government, different stakeholders may have different motivations and concerns in supporting decentralization reforms. In fact, rather than as champions for decentralization, Bahl (1999) considers most central government ministries as potentially weak or ambivalent supporters of decentralization reforms. For instance, as the steward of a country’s finances, the main concerns of the Ministry of Finance include fiduciary control, macro-fiscal stability, and efficient public resource utilization. As such, the Finance Ministry might propose strict limits to decentralization in order to hold on to the main fiscal tools for stabilization policy purposes. Likewise, central line ministries may only weakly support decentralization, unless they are assured substantial control the standards of local public service delivery, including direct or indirect power over local staff or frontline service delivery decisions. In fact, even the Ministry of Local Government is often only seen as an ambivalent supporter of decentralization reform. While the ministry would generally favor greater functional powers and a greater guaranteed share of resources for local governments, it would often like to ensure top-down oversight by the Ministry over local government activities, while controlling the distribution of those resources to the local level itself.
It was noted earlier in this document that in order to reap the benefit from decentralization, the intergovernmental architecture should balance authority and accountability across the political (or governance), administrative, and fiscal aspects of decentralization. From a political economy angle, however, Eaton and Schroeder (2010) suggest that it is not unusual for central government stakeholders to give the appearance of pursuing decentralization, while in reality clinging to power in at least some dimension of decentralization. This allows the central government to appear as a champion of decentralization, while effectively maintaining power over the local public sector by its control over the political, administrative, or fiscal levers (Boex and Yilmaz 2010; Boex and Simatupang 2015).