The incidence of local government allocations in Tanzania

Since 1999, Tanzania has been actively pursuing reforms of the way in which the central government finances local government activities. This paper looks at the current incidence of central government allocations to local authorities in Tanzania through: 1) examining of potential problems with the current financing method, 2) showing large variations between local government allocations, and 3) finding that surprisingly what drives t his distribution of resources maybe substantial pro-wealthy and pro-urban tendencies in the way in which central government officials divide public resources across local government units. Members of parliament have expressed concern about the current incidence of local government resources and the discretion that the central government bureaucracy has over local government allocations. In addition, understanding the current incidence of local government finances is crucial as the Government of Tanzania is in the process of considering the introduction of a formula-based system of intergovernmental block grants. A thorough understanding of the current incidence of central-local government allocations will aid in the design of a sound system of formula-based block grants, and will likely also reveal possible political obstacles that the introduction of a new block grant system may face. (Authors' abstract)