State-business relations have become an important mechanism for improving information flow between government and the private sector, and depending on the policy relevance of the information transmitted state-business relations can help to reduce policy and institutional failures that arise from poor policy coordination and asymmetric information. While recent empirical studies have demonstrated that effective state-business relations increase the productivity of firms in Sub-Saharan Africa, there is little understanding of how such relations influence the national budget and adoption of pro-poor expenditures in developing countries.
In this paper, we examine the role non-state actors play in shaping tax and expenditures policies through formal budget processes, using data compiled from budget submissions for the 2008 budget and lobbying activity data published in print media between 2006 and 2008. Analysis of these data indicate that the current institutional arrangement established to encourage participation of non-state actors in formulating the budget has been utilized quite effectively by several non-state actors to influence budget decisions. The data also show that tax proposals submitted through line government departments and agencies were more likely to be adopted in the budget as bureaucrats helped to shepherd these proposals throughout the budget process. Those more able to articulate and justify their own budget proposal also recorded higher success rates than those who lacked such capacities and skills to more convincingly present their budget proposals to government. Such capacities and skills are largely lacking among several civil society organisations that evidently had the lowest number of budget submissions, albeit quite active in public lobbying through the media.
Donors can help build the necessary capacities in a bid to promote policy dialogue; democratic economic governance and state-building by encouraging civil society participation in fiscal policy-making processes. Measures to strengthen state-business relations and effectiveness in lobbying for more pro-poor fiscal policies and strategies are discussed.
Discussion Paper Series, Research Programme Consortium for Improving Institutions for Pro-Poor Growth, Manchester, UK, No. 28, 32 pp.