Political Settlements and Revenue Bargains in Africa

We know little of how citizens respond to increased taxation. Do they protest, do they demand services in return for the tax, or do they accept increased tax burdens?

This research programme has studied a series of micro-level revenue bargaining processes. On this basis, our research has widened/deepened our theoretical and empirical knowledge about revenue bargaining processes in lowincome countries with a view to identifying both what triggered the bargaining processes, how the processes evolved and whether they resulted in a sort of contract or agreement between the parties. Theoretically, we have developed and applied a framework inspired by fiscal sociology, which has focused the role of revenue mobilization in state-building processes, combined with political settlement theory, which has a more explicit and applicable focus on relations of power.

Motivation for research

‘In some historical periods, the immediate formative influence of the fiscal needs and policy of the state on the development of the economy and with it on all forms of life and all aspects of culture explains practically all the major features of events; in most periods it explains a great deal and there are but a few periods when it explains nothing.’ (Joseph Schumpeter, 1918)

Schumpeter’s point made almost a century ago, that the revenue base and policies of the state are closely connected has inspired a generation of scholars exploring the relationship between revenue collection and the nature of the state. The ‘new fiscal sociology’ as represented by Michael Mann, Charles Tilly, and Margaret Levi, among others, all in their different ways explore the dynamics of European state-making. They point to how taxation to finance war provided an incentive to bargain with tax payers to reach a fiscal contract that ensured compliance. Rentier state theories in many ways offer a mirror image of the fiscal contract theory: if revenue comes from extractive natural resources or aid, states will not have an incentive to enter into a fiscal contract with their citizens. As a consequence, there will not be what Mick Moore has called a ‘governance dividend’ of taxation.

There is a growing body of literature on how these patterns of state-building apply to low-income countries. First of all, interstate war is not present in the way it was when European states were in the making. This means that rulers do not have the same incentives to maximise revenues. Secondly, democracy, or its minimal version of regular competitive elections, is often introduced prior to the construction of well-established tax systems which gives bargaining about revenue a different character. On the basis of a case study of Zambia, for example, Lise Rakner and Odd-Helge Fjeldstad have shown that elections may serve to politicise the revenues from natural resources in a way so that they become part of a bargaining process between states and citizens. Hence, even if citizens do not pay tax, they may take part in the bargaining for revenue. Often, the causal processes identified in new fiscal sociology do not follow the patterns identified in low-income countries. The fiscal contract may be turned on its head, so to speak.

Will Prichard has examined the conditions under which tax bargains occur. He identifies cases in sub-Saharan Africa where taxation leads to greater accountability. However, we still do not know much about the micro-foundations of revenue bargaining. We know little about the returns that materialise from the bargaining, and we know little about how revenue providers, actual or potential, affect government policy. Through a series of studies of instances of revenue bargaining, this project seeks to add to our theoretical and empirical knowledge about revenue bargaining processes in low-income countries with a particular focus on the returns: the decisions or non-decisions of powerholders.

Our conceptualisation of revenue bargaining hones in on political dynamics whereby the interests and power of members of government and of different revenue providers take center stage. A political settlement approach that conceptualises political dynamics fitting both democratic and non-democratic settings and that can include bargaining over both collective (public) and narrow goods (e.g. patronage). The political settlement approach helps us identify powerful organisations in society and their interactions with each other. Using a framework combining political settlement and fiscal contract theory, our research programme aims to offer a series of political economy analyses of specific bargains.

More about the project

Over the last decade, a number of governments in Sub-Saharan Africa have become less dependent on aid from their traditional partners. They increasingly rely on other revenue sources such as VAT and income taxes, income from natural resources, and financial loans from non-traditional donors such as China or from the international private capital market.

At the same time, the policy priorities of these countries’ governments appear to be changing as they become less dependent and reclaim ownership. Whereas poverty reduction and social service provision were highly prioritised around the turn of the Millennium, focus now appears to have shifted towards infrastructure, power supply, 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 programme explores how formal and informal revenue bargains affect public policies. We offer a contextual political settlement analysis in order to better understand the politically mediated influence of the main revenue providers.

We do this by combining a macro-historical comparative study of Uganda and Tanzania over time with a micro-level study of specific instances of revenue bargaining. Uganda and Tanzania are typical examples of the changing composition of revenue providers that African governments experience and yet, despite many similarities, their political settlements differ substantially in terms of the number of and degree of conflicts between powerful factions. Therefore, they make for good cases of comparison.

A working paper exists and can be requested from Anne Mette Kjær at mkjaer@ps.au.dk

Activities

PSRB workshops

PSRB Workshop, Aarhus, August 2022

August 10-12 2022

The purpose of the workshop was to present and discuss paper drafts, discuss ongoing projects and paper still to be produced as well as to discuss publication and dissemination plans.

Find the PSRB Workshop 2022 programme here

Workshop at the section for comparative politics, Department of Political Science, Aarhus University, October 2020

Kjær, A. M, Bak, A. K., and Ulriksen, M. S. ‘When state and revenue providers negotiate: Theorising triggers, processes and outcomes of revenue bargains’.

PSRB Workshop, Aarhus, June 2020 (COVID-cancelled). Replaced with online webinars

The PSRB workshop in june 2020 was cancelled due to COVID-19. The workshop was replaced by several online webinars:

Friday October 23^rd,2020

Anne Mette Kjær, Marianne S. Ulriksen and Ane Karoline Bak presents the concluding chapter of the OUP book ‘Politics of Revenue Bargaining’.

Tuesday, Nov 17, 2020

Ane Karoline Bak presents her chapter contribution to the OUP book ‘Brokered fiscal contracts?’

Tuesday Dec 8^th, 2020

Moses Khisa, Jamal Msami, and Ole Therkildsen presents their working paper on campaign financing.

Oscar Kamusiime presents his working paper based on his PhD thesis.

Monday May 4^th , 2021

Constantine George presents his working paper based on his PhD thesis.

August 2021

Dr. David Bakibinga, Anne Mette Kjær and Oscar Kamusiime participate in Oscars first doctoral Committee meeting

PSRB Workshop, Arusha, January 2019

7-9 January 2019

The purpose of the workshop was to present paper drafts and to discuss future projects.

Find the PSRB Workshop 2019 programme here

PSRB Workshop, Bagamoyo, August 2017

Workshop in Bagamoyo, Tanzania, in August 2017

21-26 August 2017

The purpose of the workshop is to present and discuss full paper drafts, to comment and discuss the papers, to revise and write more, and finally to develop the projects further.

Find the PSRB-Africa Workshop programme here

The Department of Political Sciences Annual departmental seminar for alumni. Aarhus University, August 2017

Participants from the PSRB project:

Kjær, A. M. ‘Stater og skatter i de fattigste lande’.

PSRB Workshop, Entebbe, January 2017

25-27 January 2017

The purpose of the workshop is to present work in progress, to develop and discuss our common approach and framework, and to discuss methodologies and future steps.

Find the PSRB-Africa Workshop programme here

PSRB Project Launch Workshop, Aarhus, August 2016

22-26 August 2016

The purpose of the workshop was to get the research going, to discuss the collaborative research, and to present and develop ideas together. The main goal was to find a common platform that we can all contribute to.

Find the Project Launch Workshop programme here