Constituency Development Funds (CDFs)
Traditionally parliaments do not spend or manage the expenditure of tax revenue, as this is the purview of the executive branch of government. And most parliaments in the world still adhere to this “firewall” between the role of parliament and that of the executive branch.
However, MPs have a special knowledge as to the development demands of their constituencies, which may be located far from the capital and from government officials. It is also the MP who is held accountable for the delivery of funds and capital projects to the constituency. A further concern is that in a parliamentary system in which the executive is in the parliament as the government bench (i.e. – the Westminster system), funds are often allocated to government MPs to curry favor with voters and are withheld from opposition constituencies for the same reason.
It is because of these concerns that some countries have developed constituency development funds (CDFs). These are funds, usually small but significant, that are allocated to a constituency for use in development projects A key aspect of a CDF is that the MP plays a crucial and direct role in the allocation of the funds. In some countries, the MP is wholly responsible for the final decision as to allocation. In others, the MP has an advisory group that will suggest projects. In still other systems, the MP makes recommendations that must be approved by the executive branch.
It must be noted that CDFs are controversial for three main reasons:
1. Accountability: There are many stories of MPs pocketing the funds or using them to fund projects that benefit family and friends. In some countries, these stories are well documented through monitoring that has been conducted by CSOs. Some countries have reacted to such concerns and have developed a more stringent accounting and reporting system. Ultimate accountability for an MP is to not be re-elected and there is anecdotal evidence that the misuse of CDFs has resulted in the defeat of such MPs and these stories are well circulated amongst political classes.
2. Effectiveness: An MP may use CDFs to fund the construction of a much-needed school or health clinic in a rural area or the construction of a water main or road to a community. However, once a capital project has been completed, it is the role of the government to fund the operation of a school or clinic (i.e. – hire teachers and nurses) and maintain roads. The use of the CDF funds for the capital project may not result in that project being a priority for the government or the government may not have the funds to maintain all of these new clinics and schools. This can result in an ineffective use of valuable tax revenues or aid.
3. Conflict of Interest: As noted above, the traditional role of a parliament is to monitor the expenditure of funds and the actions of the executive branch of government. In this role, since parliament is not expending funds, it is an independent third party that can oversee such spending without any conflict. However, once MPs are provided with funds and have control of this expenditure, they are in conflict if they are the main body for oversight of the expenditure of all tax revenues, including CDFs.
These are serious concerns and for these reasons many countries have decided not to create CDFs, but these funds are not likely to disappear. MPs are key political actors in any country and they will want to control funds to provide services and capital projects to their constituents, as there is a likely political benefit to such funds. The key may be to ensure there is adequate and appropriate monitoring and reporting of the use of such funds.