The financing of municipalities and regions remains one of the most vulnerable links in fiscal decentralization on the continent. In many countries, local authorities are granted broad powers in areas such as infrastructure, education, health, and urban planning, but their resources remain limited. In several countries, local authorities capture on average only about 3% of public revenue, while their expenditures represent nearly 8%; a gap that illustrates the structural weakness of their financial autonomy. This data comes primarily from UCLG's 2023 work on African local finances, although the ratios vary depending on the country and context.

This situation results in delays in land-use planning, difficulty in ensuring the continuity of essential services, and an inability to plan multi-year investments. Municipalities are heavily dependent on state transfers, which generally represent between 70% and 90% of their total resources, with significant differences between urban and rural areas. Local taxes, including property tax and municipal fees, rarely exceed 10% to 30% of local budgets, thus limiting their capacity to act autonomously.

The consequences are visible in day-to-day management. When state transfers are delayed, some municipalities postpone public lighting, sanitation, or road rehabilitation projects. This financial constraint exacerbates territorial disparities, as rural areas, with a smaller tax base, become even more dependent on the central government.

Studies conducted by UN-Habitat in 2022 indicate that more than half of African communities do not meet their annual budget forecasts due to insufficient revenue.

Some reforms aim to strengthen local financial governance. Several countries have undertaken modernization of property taxation, broadened the base of local taxes, or improved the valuation of public assets. Others have introduced equalization mechanisms designed to reduce the gap between wealthy and poor municipalities.

However, implementation remains very uneven, and the effects remain limited as long as tax information systems, budget transparency and local administrative capacity do not progress simultaneously.

Truly effective decentralization requires consistency between the powers transferred and the financial resources allocated. As long as the gap persists between increased responsibilities and limited resources, local authorities will be unable to sustainably improve public services or support balanced territorial growth.