Political Settlements and Revenue Bargains in Africa
Over the last decade, a number of countries in Africa have become less dependent on traditional aid as other sources of income have grown. At the same time, the policy priorities of these countries’ governments may be changing. Whereas poverty reduction and social service provision were highly prioritized around the turn of the millennium, focus is shifting towards infrastructure and industrial policy. Declining aid dependence and more country ownership over policy are clearly desirable. However, we know little about how the changes in the composition of revenue providers affect bargaining over revenue and ultimately, public policy. Revenue bargaining processes are inherently political. They are affected by the countries’ political settlements and electoral pressures. This proposed research builds research capacity through exploring how formal and informal revenue bargains affect public policies. As a joint team of legal experts, political scientists, sociologists and economists, we provide policy-relevant understanding of the political economy of tax and revenue bargaining in least developed countries, and Uganda and Tanzania specifically. Our main hypothesis is that changes in the relative power of revenue providers will lead to a change in the policy priorities of national governments. We explore this by combining a macro-historical comparative study of Uganda and Tanzania over time with a micro-level study of the politics of specific instances of revenue bargaining.
Halfway into the PSRB program, researchers have studied specific revenue bargains in Tanzania, Uganda, Togo and Senegal (the latter two by Aarhus PhD students). The studies are listed on the project website. They include for instance research on bargaining over tax reforms and exemptions, on negotiating for funding for election campaigns, on agricultural taxation and farmers attempts to influence agricultural policy, on governments’ attempts to tax the informal sector, and on the revenue collecting agents’ attempts to achieve compliance. The contributions show firstly how external factors can trigger revenue bargains; i.e. how new reforms trigger resistance and set in motion protests. Second, protests create an impetus for bargaining, and our cases show that often exemptions are negotiated, using both formal and informal avenues of influence. Third, in terms of outcomes of the bargains, these informal negotiations make it challenging to reach virtuous circles of revenue bargaining involving better services in return for tax.