The central government should link revenue distribution to the expenditure responsibilities of local governments, and be proactive in building the capacity of local governments to manage these responsibilities.

KEY MESSAGES

• National governments often share the responsibilities of governing with local governments through a process of decentralization, including on natural resource governance.
• In many resource-rich decentralized countries, local governments receive resource revenues through either direct payments from companies or resource revenue transfers from national government.
• Deciding whether subnational governments should receive resource revenues is often a complicated policy debate involving competing objectives, including promoting national cohesion, interregional equity, effective national fiscal management, and optimizing resource exploitation over time and space.
• Timely, accessible revenue sharing is necessary for subnational governments to fulfill their functions.