Critical Reflection on the Principle of Financial Compensation for the Transfer of Competences in the New Cameroon Law of Decentralisation

Decentralisation in Cameroon

The transfer of competences is the soul of territorial decentralisation. In fact, it consists of the State giving the Decentralized Territorial Communities (hereinafter referred to as ‘DTCs’) the necessary legal empowerment to intervene in certain spheres of action that are transferred to them. While the political relevance of this approach is difficult to contest, its financial cost is worrying. One wonders whether it is possible for the DTC concerned to exercise the newly transferred competence without the “normal execution” of its budget being affected.

To solve this problem, the Cameroonian legislator established the principle of financial compensation for the transfer of competences in Article 25 of Law No. 2004/017 on the orientation of decentralisation. Technically, this means that the State must allocate to the beneficiary local government unit resources at least equivalent to the expenses that it used to incur for the exercise of this competence. This compensation must be integral, concomitant with the transfer, progressive, controlled, and in line with the objective of financial autonomy.

In the field, however, there are major difficulties in applying this principle. These include the approximate control of the methodology for evaluating the financial costs corresponding to the transferred competences, the resistance of the central administration in breaking down the totality of the compensation funds, and the lack of clarity regarding the consistency of the financing of the operation.

In order to provide some solutions, the legislator adopted, on December 24, 2019, the law n°2019/024 on the General Code of Decentralized Territorial Authorities (hereafter “CGCTD”). In laying the foundations of the new Cameroonian law of decentralisation, this text renewed in its statement the principle of financial compensation for the transfer of powers. Article 27 (1) of the CGCTD stipulates that ‘the financial charges resulting for each [CTD] from the transfer of competences shall be the object of an allocation by the State of resources of an amount at least equivalent to the said charges’. But beyond this formal consecration, the fundamental question that one is entitled to ask is whether the new reform has sufficiently corrected the shortcomings denounced.

A critical reading of the provisions of the CGCTD suggests a rather mixed picture. Indeed, on the one hand, there are still methodological gaps in the evaluation of the costs (I), and on the other hand, there are still ambiguities concerning the distribution of the financing of the compensation (II).

The Persistence of Methodological Shortcomings in the Evaluation of Costs

In general, transfers of competences have a financial cost that the State bears through the compensation mechanism. But before implementing it, it is necessary to carry out an evaluation beforehand. This is clearly indicated in Article 26 (1) of the CGCTD, which states that ‘the costs corresponding to the exercise of transferred competences shall be subject to an evaluation prior to the transfer of the said competences.’ Although the idea of an evaluation is commendable, one cannot help but notice that the law has not taken care to develop sufficiently important modalities to ensure its effectiveness.

One example is the absence of a specialized structure authorized to evaluate the cost of transfers of competences. To date, it is the State – and particularly the ministry concerned by the transfer – that alone carries out this evaluation. As both “judge and party,” there is a strong risk that it will underestimate the costs. To avoid this occurrence, it should be suggested that an ad hoc committee made up of representatives of the central administration and local authorities be set up, which could propose more realistic, more balanced, and less politicized solutions.

Another point of discussion concerns the identification of the evaluation period which, according to Article 27 (2) of the CGCTD, only considers “the financial year immediately preceding the date of the transfer…” By opting for this configuration, one runs the risk of ‘a mechanical renewal of the same financial means from one year to the next.’ This is not relevant from the perspective of a fair evaluation of the financial cost of the transferred competence. To remedy this, it is possible to envisage “an evaluation over two or three years preceding the date of the transfer.”

Finally, it should be emphasized that there is no clear distinction between the evaluation of financial expenses dedicated to operation and those allocated to investment, since Article 27 (1) of the CGCTD assimilates them. This assimilation is questionable insofar as while operating expenses can be automatically renewed from one financial year to the next, investment expenses are more flexible, i.e. more dependent on the economic situation. Taking this variable into account in the future can guarantee the reliability of the evaluation.

Apart from the evaluation of costs, the other grey area concerns the distribution of the financing of the compensation.

Continuing Ambiguities Regarding the Distribution of Funding

The financing of the financial compensation for transfers of competences is ensured, as provided for in Article 26 (2) of the CGCTD, by the Dotation Générale de la Décentralisation (hereafter ‘DGD’) or by ‘other fiscal resources according to the methods defined by the law.’ To focus only on the first source of funding – the most important one at that – namely the DGD, it should be noted that it has benefited from a significant increase following the reform of December 24, 2019. From now on, and as provided for in Article 25 (3) of the CGCTD, the fraction of the State budget allocated to it ‘may not be less than 15%.’ Despite the extent of this development, there are significant difficulties concerning the distribution of the DGD. Two of these difficulties deserve to be highlighted.

The first relates to the legal nature of the act organizing the distribution. Indeed, through a haphazardly drafted provision, the legislator introduced doubt by stating that: ‘the modalities of the distribution, among the CTD, of the DGD instituted by article 23 of the present law can be fixed by the finance law.’

The question that arises is the following: In the absence of a finance law – since there is an option – what other normative support can formalize the said distribution? In reality, we must look to previous practice for an answer. If we look at the 2019 financial year, for example, we see that it is a decree of the Prime Minister. In the end, as things are structured, the distribution is made either by law or by regulation. This situation reinforces a feeling of vagueness.

Basically, there is not enough information on the criteria used to share the DGD among the local authorities. Instructive in this regard, Decree No. 2019/0829/PM of February 22, 2019, establishing the distribution of the DGD for the 2019 financial year, enshrines an arithmetical equality in the distribution, with all the TDCs having benefited from the same amount, with regard to the financial portion devoted to investment. The approach is questionable insofar as not all TDCs experience the same realities, nor have the same needs.

Conclusion

The aim of this brief reflection was to take a critical look at the principle of financial compensation for the transfer of competences in the new Cameroonian law on decentralisation. Although the changes enshrined in the reform cannot be dismissed out of

hand, there are still dysfunctions that deserve to be corrected. It is therefore to be hoped that a new legislative reform will be made in this sense.

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Ph.D in Public Law - Faculty of Legal and Political Sciences, University of Dschang

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