As mentioned in the first chapter, decentralization is a process through which authority and responsibilities for substantial government functions are transferred from central government to intermediate and local governments, and often also to communities. The World Bank essentially defines decentralization as ‘the transfer of political, administrative and fiscal responsibilities to locally elected bodies in urban and rural areas, and the empowerment of communities to exert control over these bodies’ (World Bank, 2000a). Decentralization can be categorized broadly along two schemes, namely: (i) deconcentration, delegation and devolution based on the extent of decentralization and (ii) fiscal, political and administrative decentralization. These two schemes are briefly discussed in the next section of this chapter.

Deconcentration results in the transfer of political, administrative and fiscal responsibilities to lower units ‘within’ central line ministries or agencies, i.e. a subordinate entity of the government. Deconcentration often results in hands on control over the local government by the central government. This form of decentralization has often been criticized as the weakest form of decentralization (Crook and Manor, 1998; Rondinelli et al., 1989; and Meenakshisundaram, 1999). This form of decentralization can be observed in practice in some of the African countries.

Delegation is the form of decentralization in which responsibilities are transferred to organizations that are ‘outside the regular bureaucratic structure and are only indirectly controlled by the central government’. Delegation results in the transfer of powers and functions to the local government entity in a framework which provides space for an overarching control of the Central/state government over the local government entity, even though there may be no control over the day-to-day functioning of the local government (Meenakshisundaram, 1999).

Devolution, supposed to be the strongest featured form of decentralization, results in the transfer of powers, functions and finances to the local government in a way that the local government would be accountable to its voters rather than to the central or state governments.