Do you know the cost of public services in your district? Do you know the cost of paving or lighting streets and maintaining public gardens and trees? Do you know who is supposed to pay for the delivery of water, education, gas, or healthcare? Do you know who pays the salaries of the employees delivering services, or which part of the government bureaucracy funds the construction of a local health clinic or an electricity substation? How would you prioritize funding specific services in your neighborhood and what are the trade-offs between the cost of public services and their impact in your community?

These are issues which your local administration unit and its employees fund and supervise, but their costs largely remain a mystery to most residents. Unfortunately, opaque government policies and the lack of a right to information law in Egypt make it difficult for citizens to learn about these issues. The financial edifice of government reveals important characteristics as it translates the priorities and cost of governance into concrete material shape. The government is funded by tax dollars and citizens have a right and a responsibility to audit their government, learn more about the costs and funding of public goods, and influence and deliberate about how such financial resources can be distributed equitably. TADAMUN’s concern with the built environment, urban government, and social justice recognizes the subregional local administrative system, or idāra al-maḥaliyya, as a very important, but under-appreciated factor in transforming Egypt’s cities and solving local problems at the local level.

In the case of Egypt, the lower levels of the state (governorate, markaz [the capital city of the governorate and other cities and villages], city, district, and village) implement and administer laws that are determined at the national level (either by executive or legislative means). Egyptians visit their offices and engage with their employees frequently for a wide range of services, needs, and regulatory issues. Yet because the Egyptian government is highly centralized and hierarchical local “government” in Egypt is largely administrative rather than deliberative and has few financial and technical resources to implement policies. During the Mubarak era, elected Local People’s Councils (LPCs) were dominated by the government party (the National Democratic Party) and were unrepresentative. LPCs were also dominated by the more powerful Executive Councils which managed the local bureaucratic offices of the state at the subregional level and were staffed largely by employees of national Ministries (see TADAMUN’s Local Government article for further information).

Although by law Local People’s Councils (LPCs) are able to amend and approve local budgets, in practice, the budgets were devised by the central ministries and the executive councils of the local administration, approved by the Ministry of Finance, and given to the local administrators to implement. Because of Egypt’s long history with government by patronage, members of local executive councils and the employees of the local government units were more concerned with pleasing their superiors farther up the executive structure or in national Ministries rather than doing their utmost to serve local residents.

TADAMUN suggests that increased independence at the local administrative level will allow officials to respond more easily to the demands of Egyptians, to create policies that are appropriate for their communities, and reconstitute the relationship of the state with the people. We believe that the elected LPCs need strengthening and further resources to deepen democracy and answer the revolution’s call for political freedom. We also believe that local executive councils deserve more technical support and training and more equitable wages to improve their capacity to deliver services and serve their communities.

One of the obstacles to move from a system of local “administration” to a more representative and deliberative system of local “government” in Egypt is money. Historically, local administrative units receive the overwhelming majority of their revenue from the central government. In recent years, this dependency has increased. Although local administration is allowed, by law, to collect taxes and fees, locally elected members of the LPCs are reluctant to impose these levies on their constituency, thus reinforcing the centralized nature of governance.

To the extent possible, this brief breaks down revenue sources and expenditures for local administration in Egypt. Because budgets are treated as state secrets in Egypt, and shared on a need-to-know basis, it is difficult to determine exactly how much money is allocated to each local district and how money is spent. Still, the broad figures point to a major challenge in strengthening local governance in Egypt.

Local Administration Revenue: In Law and Practice

Articles 184 and 185 of the new Egyptian Constitution (November 2012), discuss sources of funding for local administration. Article 184 states, “The State shall provide what the Local Unit should need in terms of technical, administrative and financial assistance . . .” establishing the requirement that the central government provide resources to local administration. Article 185 establishes the authority of local administration to collect “additional taxes and fees of a local nature” beyond what the central government provides. In addition to what is constitutionally mandated, there are at least two other types of revenue for local administration: profits from governorate-run enterprises and private donations, usually from international donors for decentralization or urban governance programs (Soliman 2011, 86). However, these funds are project-based and cannot be included as a constant source of revenue for local administration. Therefore, taxes and fees remain the most important sources of revenue for local administration.

Taxes include local taxes levied on entertainment, agricultural land, buildings, property, and motor vehicles and motor vehicle operators, as well as surtaxes on some central taxes, such as taxes on property and net wealth. Local fees consist of a series of charges and fines, including motor vehicle and municipal services charges and various registration and licensing fees.[1] However, local revenue from these sources is very small and cannot meet local administration needs. In the fiscal year 2011-2012, for instance, local revenues from local taxes and fees constituted only 9 percent of the local administration resources. As Figure 1 shows, the other 91 percent is provided by the central government.

Figure 1: Public Resources Dedicated to Local Administration by Type, FY 2005/2006 – 2011/2012

As Figure 1 indicates, local administration relies heavily on central government funding. The increase in local administrations’ reliance on the central government resources has steadily increased since the late 1980s. The percentage of central resources to the total local administration budget increased from 76.8 percent in the fiscal year 1989-1990 to 81.4 percent in 1997-1998, and more than 91 percent in 2011/2012 (Soliman 2011).

How Important is Local Administration in Egypt? Let the Money Do the Talking

Local administration is comparatively unimportant to the central government. Given the nature of the Egyptian state, this is expected. But just how unimportant is it? A simple measure of importance is money. How much does the Egyptian government spend to support local administration as compared to the central administration? According to the State’s General Budget for Fiscal Year 2011/2012 released by the Ministry of Finance, public expenditures in Egypt totaled about EGP 490 billion. Of that total, just EGP 60 billion, or 12 percent of total expenditures, was spent on local administration. By comparison, most developed countries spend between 30 to 40 percent of public resources at the sub-national level and transition economies spend about 20 to 30 percent (Boex 2011).

Figure 2: Public Expenditures in Egypt, FY 2011/2012

Figure 3 compares the size of local administration’s expenditures (to understand the vertical allocation of budgetary resources) as a percentage of national recurrent expenditures in Egypt to three other developing countries: Cambodia, Mozambique, and Afghanistan. Although this calculation of the size of local administration is slightly different from the calculation above, the outcome is the same: Egypt’s local administrative structure is half the size of Cambodia’s and one-third the size of Afghanistan’s (Boex 2011).

Figure 3: Comparison of the Size of the Local Public Sector [Local Government] as a Percentage of Recurrent Expenditures of Egypt and Other Developing Countries

Unfortunately, further analysis of central government spending at the sub-national level is impossible due to the lack of a right to information law in Egypt. Governorates do not publish their own budgets, nor do lower levels of local administration (for further information on budgetary issues in Egypt see TADAMUN’s “Budget Transparency and the Citizen Budget of Egypt). The State Budget published by the Ministry of Finance is listed by spending type, though not in detail. Further, the central budget is available only as a 900 page document, not in an excel chart or database that lends itself to ready analysis. The public’s right to hold its local government accountable is thus, very constrained by these tight controls on information. While some data is certainly available which relate to these issues, Egypt is a much surveyed, and studied government, but the results of this research and government budgets remain largely for internal use.

While we believe the local administration is Egypt’s best opportunity to deepen democracy throughout the country, there is a deficit of trust between the citizens and the government. One obstacle is this culture of secrecy that treats budgets as state secrets. After years of cronyism and patronage under the Mubarak regime, the people of Egypt have a right to know how public money is spent. There is no better place to start than with local budgets.

Works Cited:

Boex, Jamie. 2011. Democratization in Egypt: The Potential Role of Decentralization. [Policy Brief]. Washington, DC: Urban Institute Center on International Development and Governance.

Government of Egypt. “State’s General Budget for the Fiscal Year.” Ministry of Finance. Cairo.

Soliman, Samer. 2011. Autumn of Dictatorship: Fiscal Crisis and Political Change in Egypt under Mubarak. Stanford, CA: Stanford University Press.