Finances are a decisive factor of any decentralisation process. This contribution examines the financial decentralisation framework under the 1996 Constitution of Cameroon, with some attention placed on local government’s own revenue and transfers from the Special Council Support Fund for Mutual Assistance (with French acronym FEICOM).
In Cameroon, the central government has responsibility over taxes on international transactions, like customs duties, and a considerable share of income and general sales taxes, such as value-added tax (VAT). The VAT was introduced in 1998. Reforms also created specialised units for the taxation of specific sectors, such as fisheries, forestry and cattle. But data-sharing and coordination between social security authorities, customs and tax experts have not been successful, albeit that since mid-1996 there have been irrefutable progress, including a steady increase in fiscal revenue figures (excluding oil revenue figures) and in the number of taxpayers. However, these improvements have been judged as inadequate, especially given that the Anglophone regions remain in conflict and underdeveloped with poor road infrastructure.
The 1996 Constitution of Cameroon accords minimal financial autonomy to the regions and municipal councils. Financial decisions are taken by the central government and imposed on the regions and municipal councils. The main instrument governing financial issues under the decentralisation architecture is Law No. 2009/011 of 10 July 2009 relating to Financial Regime of Regional and Local Authorities. In section 2, it purports inter alia to give local government authorities ‘financial autonomy for the management of regional or local interests’. The regions in Cameroon depend on grants and financial transfers from the central government. Regions are not consulted in the central government’s budgeting process, on which they consequently remain dependent. Custom duties as well as major taxes are collected by the central government and distributed to the regions and councils. Local governments, for instance, are left with little but market fees, business licenses, property tax and user charges. The 1996 Constitution therefore allows for a centralised system of government, where funds especially taxes collected are transferred from the central government to regions and councils.
Despite fundamental reforms of the central government tax system during the last two decades, regional and local government tax systems remain greatly ignored. The local tax systems are often expensive to manage and serve to worsen inequity. Generally, there is little coordination in taxation between different spheres of government, which to some degree has to do with lack of skills and capacity. This has led to double-taxation of the same revenue base as well as discrepancies between local and central-government tax policies.
While the present capacity for most rural councils and regions in Cameroon to raise considerable own revenues is limited, the ability for revenue augmentation in urban councils in the administrative capitals of some regions is better. However, one main hurdle today for several municipalities in regions in Cameroon is their inability to make full collection of revenue due to them, which is evident in the huge gaps between reported and projected revenues. This is as a result of the porous administrative propensity for enforcing the payment of taxes and for assessing the revenue base; embezzlement of revenue; corruption; external pressure on local finance departments to provide realistic prognoses; and political pressure on local tax administrations to relax revenue collection, particularly so during election periods.
FEICOM’s major revenue role is the centralised collection and redistribution of the Additional Council Tax levy (Centimes Additionnels Communaux, or CAC). CAC is a 10 percent levy on certain types of national taxation which is apportioned for the financing of council activities. Taxes to which this levy is applied include entertainment tax, general income tax, business tax and VAT. The distorted manner of revenue distribution, along with the widely varying circumstances of individual councils, has led to significant inequalities in the way in which resources are distributed.
Local government accepts block grant revenue from the central government, which is paid to them through FEICOM. These grants are supposed to be weighted according to the council’s surface area, population and other considerations. FEICOM also provides councils with non-financial support, including project evaluation and expert technical assistance.
Structures such as the Directorate General (DG) of the Budget, the DG of Taxation, and the DG of the Treasury help FEICOM in the collection, centralisation and redistribution of taxes. Other institutions such as the National Anti-Corruption Commission and the Ministry of Supreme State Control need to assist FEICOM in ensuring that taxes are used judiciously in the decentralisation process. However, these structures have not been able to assist FEICOM sufficiently in making sure that resources are shared equitably among local governments. In addition to this inequitable allocation of resources, embezzlement and corruption remain acute.
It has been established that the fiscal decentralisation agenda under the 1996 Constitution is porous and needs reform. It is therefore necessary to bring in the case of South Africa with respect to how adequate fiscal and resource autonomy may contribute in a rationalised decentralisation design for reinforced administrative and political autonomy. This may better inform constitution builders in creating a more appropriate decentralisation design for Cameroon. South Africa allows local government to raise their own finances. The 1996 Constitution of South Africa states that the designation of political and administrative functions and powers to lower spheres of government must be accompanied by adequate financial means.
In most decentralised countries, fiscal design options have three main elements. The first is intergovernmental transfers and focuses on how various spheres of government equalise imbalances and share revenues. The second is the assignment of responsibility to a sphere or spheres of government to raise revenue. The third element is the assignment of responsibility for expenditure on services and the like at the various spheres of government. To guarantee that the administration successfully carries out its responsibilities, the propensity to assign duties and competencies must follow or accompany the assignment of responsibility for expenditure. If all taxing responsibility is conferred on the central government, this may result in undesirable consequences. For instance, by separating spending powers from the revenue-raising authority may obscure the link between the benefits or gains of public expenditure and its cost, which are the taxes levied to finance them, so that the separation does not encourage fiscal responsibility among politicians and their electorate at the local level. If the constitution gives too much responsibility for raising taxes to local government, the central government may have issues with macro-economic development planning.
It thus is necessary for constitution builders to additionally take into consideration two main factors when deciding whether to give the tax raising and spending responsibility to local government. First, revenues attributed to the local governments should be adequate to finance all locally-provided services that primarily benefit local inhabitants. Second, local government should be given the permission to collect sub-national revenues from their local residents linked to benefits obtained from local services. Making sure that there is a connection between benefits received and taxes paid strengthens the accountability of local administrators and equally governmental service delivery.
A disparity often exists between taxing and spending at the various spheres of government, particularly lower spheres of government, in that the central government usually collects the greatest share of taxes but allocates enormous spending responsibilities to the local level. Pre-transfer fiscal deficits, also termed vertical imbalances, occur. Horizontal imbalances, which are imbalances between lower spheres of government, equally exist. Usually lower spheres of government are not assigned with the same revenue raising abilities, especially as wealthy residents cannot live in every region or local government, nor do they all have the same needs. Some lower spheres of government are more populated than others while others demand more services than others. To adjust such imbalances, there thus is a need for intergovernmental transfers, vertically. If the payments are from the central government to lower spheres of government, then there is need for intergovernmental transfers, horizontally, if these transfers are between sub-national governments. There may similarly be grants transferred from the central government to lower spheres of government, which may go a long way towards giving adequate autonomy to local government in countries. Such arrangements are necessary for local government in Cameroon especially local government in the special status regions. There is no gainsaying that the government of Cameroon has made some efforts in ensuring that local government has some degree of autonomy, but more still has to be done as in the case of South Africa.
It is very necessary for the role of the Presidency, the Prime Ministry, the Ministry of Decentralisation and Local Development, as well as other concerned line ministries to accompany FEICOM in the fiscal decentralisation process of the country. This is same with other units such as the National Anti-Corruption Agency with French acronym CONAC, the directorate-general of customs, taxation and the budget. If this done it may go a long way to reduce resource wastage as well as curb corruption so as to enhance better political and administrative decentralisation.
Chofor Che CA is Technical Adviser no 2 at the National School of Local Administration , Buea, Cameroon. He is co-founder of CACLiTA. He holds a PhD (Law) obtained from the Centre for Human Rights, Faculty of Law, South Africa. In 2023, he was guest researcher at the Institute of Federalism , Faculty of Law, University of Fribourg, Switzerland. He has served before as Divisional Officer in Cameroon (appointed by the President of the Republic) and consulted for several international institutions.
 Muñoz, J.M., Business Visibility and Taxation in Northern Cameroon African Studies Review 53 (2) 2010, 153. See also Mafany, C.N., The Anglophone-Cameroonian Armed Conflict in North and South West Regions of Cameroon: The Rulings of International Humanitarian Law and Human Rights, Commonwealth Journal of Academic Research, 1 (1) 2020, 3. http://doi.org/10.5281/zenodo.3875644 .
 Section 2 of Law No. 2009/011 of 10 July 2009 relating to Financial Regime of Regional and Local Authorities (2009 Decentralisation Finance Law).
 Fombad, C.M., Cameroon and the Anomalies of Decentralisation with a Centralist Mindset. in C.M. Fombad & N. Steytler (ed.), Decentralisation and Constitutionalism in Africa, Oxford, United Kingdom: Oxford University Press, 2019, 345.
 Ndonwi, A.K., The Tax Regime in Cameroon and The Responsibilities of Cameroonians Towards Fiscal Tax Allocations, November 30, 2019, available at http://dx.doi.org/10.2139/ssrn.3495917 (accessed 12 April 2023).
OCHA Cameroon, Situation Report, 9 March 2022. available at https://reliefweb.int/report/cameroon/cameroon-situation-report-9-march-2022 (accessed 12 April 2023).
 CAC revenue is allocated as follows: 10 percent is attributed to the central government, 20 percent remains with FEICOM, and 70 percent goes to councils. Of the total allocated to councils, 20 percent goes to Douala, the economic capital of Cameroon; 40 percent goes to Yaoundé and 36 percent to other councils. The remaining 4 percent is retained by FEICOM and utilised for various activities, for instance to support infrastructure projects in border councils, to help councils affected by natural disaster, or to compensate councils for revenue paid beyond their borders. In addition, 40 percent of forestry royalties are allocated to councils on a per capita basis.
 Section 214 (2) (d) of the Constitution of South Africa, 1996.
 Shah, A., The Reform of Intergovernmental Fiscal Relations in Developing and Emerging Market Economies, The World Bank: Washington DC, 1994, 15-18.
 Anderson, G., Fiscal Federalism: A Comparative Introduction, Oxford University Press, 2010, 2-3.
 Shah (1994) 15- 18.
 Anderson (2010) 2-3.
 Anderson, G., Federalism: An Introduction, Oxford University Press, 2008, 35-36.
 Anderson (2010) 34.
 Anderson (2010) 6.
 Bird, R.M., Subnational Taxation in Developing Countries: A Review of the Literature, Policy Research Working Paper 5450 World Bank: Washington, DC, 2010.1.
Ahmad, E., Intergovernmental Transfers: An International Perspective, in E. Ahmed (ed.), Financing Decentralised Expenditures: An International Comparison of Grants, Edward Elgar Publishing Ltd, 1997, 6. Transfers may be in the form of either revenue-sharing or surcharges whereby the national government transfers a share of revenues from specific taxes collected within that local government.
 Anderson (2010) 58.