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Sudan has undertaken decentralization reforms since the early 1990s, in a federal government system with three tiers: federal, state, and local government levels. Fiscal decentralization was fueled by a decade-long oil boom. With the secession of the South in July 2011, Sudan suffers from large oil revenue losses and significant economic instability. Own revenue mobilization at sub-national levels is low. Inadequate and unevenly distributed own-revenues at both state and local government levels and unpredictable levels of transfers from the federal government pose serious obstacles to implement the policy of decentralization. The purpose of this study is to assess how the current sub-national revenue system can be better designed and managed to thereby strengthen the states’ and localities’ own resource mobilization. The analysis focuses on the composition of sub-national revenues, administrative practices, and possible impacts of the current system on economic activities. Experiences from other African countries that have suffered similar challenges in the past are also examined. On this basis the study provides recommendations on how to improve sub-national revenue collection without jeopardizing economic activities and private sector development.

Odd-Helge Fjeldstad

Research Professor, Coordinator: Tax and Public Finance