Financing Federalism in the Sudan: Towards a New Pattern of Intergovernmental Fiscal and Financial Relations

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Mohamed Ali Mustafa, Mustafa
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Although federalism in Sudan has moved a long way in the direction of making the local inhabitants of the states more involved in the rule of their states, nonetheless, the federal government has given more weight to the expansion of political participation opportunities than to fair distribution of financial resources and public services. This research is primarily intended to investigate the process of fiscal decentralization and intergovernmental relations that stemmed from the implementation of the federal system in Sudan during the period, 1991-2001. Thus its aims include; assessing the degree of vertical imbalances resulting from revenue and expenditure assignment between the union and the constituent states forming the federation, in addition to measuring the degree of horizontal disparities across the states in terms of fiscal capacities, central grants receipts and provisions of minimum need package of basic public services such as education and health care. These aims are accomplished through reviewing the federal and subnational governments sources of revenue, identifying the procedures and method of central grants allocation and overlooking the amount of educational and health services provided by the different Northern States. The study found that, the fiscal decentralization process has produced a considerable degree of vertical imbalances between the central government and constituent states as well as horizontal disparities across the states. Still the role of the central government in the public finance remained dominant. The subnational authorities have a rather narrow fiscal base, which has further been marred by interstate fiscal disparities. Actually only few states are capable of producing adequate locally produced revenue. Other states depend on central transfers to finance their expenditure requirements. Though central transfers exemplify an important Source of revenue for those states, however, their distribution does not indicate that an objective and justifiable criteria have been followed. The system appears to be subjective, unjust and lacks scientific management. The result of the extreme disparities across the northern states, interstate disparities in terms of basic public services provision, such as education and heath care, have become one of the main causes of the general developmental inequality in Sudan. The research suggests some proposals and solutions to the problem, which include the following: First, the need for a new formula for revenue – sharing in Sudan the formula calls for a shift from grants allocation to a full-fledged system of revenue –sharing; A system that recognizes a national collection of revenue and a localized expenditure. This should be so because sources of revenue are not evenly distributed throughout the country; second, at the very outset before implementing the formula, the present two finance commissions must be replaced by a statutory finance commission; third, the implementation of the proposed formula calls for three things: A- Introducing a clause in the federal constitution linking the transfer of responsibilities to transfer of funding capabilities. B- Enactments of constitutions for each state. Such constitutions should not contradict with the federal constitution, but should embody transparency and accountability. C- Differential access on subnational basis to advantages such as education and heath services should be banned
250 page
Financing Federalism in the Sudan: Towards a New Pattern of Intergovernmental Fiscal and Financial Relations