Abstract

One of the challenges of successful decentralisation is local governments’ capacity to mobilise tax revenue efficiently. This paper aims to analyse the convergence of fiscal effort among municipal administrations in Benin. To address this, the paper estimates a three-stage stochastic frontier model following Kumbhakar et al. (2014), alongside a dispersion analysis. The data used are a panel of Benin’s seventy-seven (77) municipalities over the period 2008 to 2020, drawn from statistics of Benin’s National Commission for Local Finance (CONAFIL). The results show that temporary fiscal effort (TER) stands at 67.5%, permanent fiscal effort (KHTE) at 25.4%, and the average overall fiscal effort (OTE) of Benin’s municipalities at 17.3%. The results also show weak convergence of fiscal effort among municipalities. Finally, resource transfers received by municipalities, population density, and municipal status are found to have a significant negative influence on municipal fiscal effort. These results suggest the need to strengthen staffing levels and quality, to introduce performance-based criteria for access to central government grants, and to encourage the sharing of experience among municipalities regarding tax-collection strategies.