Leveling Up : Impacts of Performance-Based Grants on Municipal Revenue Collection in Mozambique
Due to recent decentralization reforms, municipalities now have important responsibilities in the sustainable urban development of Mozambique. This paper assesses the efficiency of World Bank funded municipal performance grants and technical assist...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/546161633368256921/Leveling-Up-Impacts-of-Performance-Based-Grants-on-Municipal-Revenue-Collection-in-Mozambique http://hdl.handle.net/10986/36340 |
| Summary: | Due to recent decentralization
reforms, municipalities now have important responsibilities
in the sustainable urban development of Mozambique. This
paper assesses the efficiency of World Bank funded municipal
performance grants and technical assistance provided to
municipalities, to enable municipalities to increase revenue
collection. The municipal performance grants transferred
resources to municipalities directed by performance-based
indicators. The technical assistance program provided
classroom and on-the-job training for municipal staff. The
effect of a municipal performance grant on revenue
collection is found to be positive and the effect is
primarily lagged. Receiving a municipal performance grant in
years t−1 and t−2 is associated with an increase in revenue
collection in year t. Contemporary effects are negative but
not significant. However, the positive impact of a lagged
municipal performance grant on revenue collection is only
significant after 2015, which coincides with implementation
of technical assistance. And when municipal performance
grants are combined with technical assistance, the
contemporary effect of the transfer is also positive and
significant. Overall, the impact of the municipal
performance grants is larger for towns than cities. For
every 10 meticais per capita received in municipal
performance grants when combined with technical assistance,
revenue collection increases by 10–11 meticais per capita in
cities and 24 and 60 meticais per capita in towns. The
findings of this study suggest that performance-based grants
incentivize local governments with low capacity to collect
more revenue. However, the transfers should be accompanied
by a technical assistance program that can support capacity
building in financial and fiscal management, as well as
urban development and investment planning. |
|---|