Gainers and Losers in the fiscal decentralization process.

[OSORO]

Countries with fiscal decentralization at its infancy are characterized by a myriad of problems, namely; no clear guidelines on what the functions are for each level of government; which costs to assign to each function; whether to use historical costs with the risk of entrenching the status quo, or monumental task of establishing norms and standards to determine unit costs; and the obvious inequalities among different jurisdictions giving rise to apparent losers and gainers. The headache of assuaging the losers and managing public expectation for the gainers often turns political. As practitioners of PFM, there is a call for sobriety not to be drawn into the political dynamisms.
The losers are required to make do with reduced expenditures with the risk of compromising the quality of service hitherto enjoyed.  Excess capacity leading to suboptimal utilization of the same within the locality is a likely eventuality.
The gainers on the other hand see fiscal decentralization as the panacea and remedy for all the alleged historical injustices hitherto suffered. Excess resources’ leading to wastage and suboptimal utilization is a likely eventuality.
The question therefore is what interventions can be put in place to ensure that fiscal decentralization is seamlessly implemented? 
Someone out there with any ideas on the subject?

[FitzFord]

Osoro,

As fiscal (and political), decentralization is historically, and invariably, a result of political negotiation, the situation that you have so accurately identified, is inevitable. Among the best real-world solutions I know of are agreements built into the Decentralization Act to revisit in specific, limited parameters,  the results of the initial (or current) design after specific time periods. This is rare - most reviews are a result of political pressures. Ghana, for example, was an early example of decentralization and was regarded as a model when it was initiated. However, the evolution of the process was frozen for decades before it was resumed in the last decade. Given realities, I suspect that the best approach is to recognize the necessity and realism of this evolutionary process and design a system that has strong core principles, and performance indicators that are used as the basis for periodic, infrequent refinements. I do not know of a model that was carefully planned and executed on that basis. Technically, I have little doubt that it is doable; politically? Not as confident...

Fitz.