Appraisal of Woreda-level Fiscal Decentralization in Addis Ababa City Government: with Particular Reference to Selected Woredas

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Addis Ababa University


Fiscal decentralization is seen as part of a reform agenda in developing countries to strengthen regional and local governments. It is believed that it improves the efficiency of public service delivery through preference matching and allocation efficiency. In light of this, this study was conducted to assess the practices of Woreda level fiscal decentralization in Addis Ababa City Government. In doing this study, explanatory mixed method research design was followed. Subjects of the study were government officials working in selected Woredas and sub-cities of Addis Ababa city. In the study, multi-stage sampling technique was used to select representative respondents. To this effect, one hundred ninety-two participants were selected using multi-stage sampling technique. Besides, sub-city and Woreda Finance and Economic Development Bureaus officials were purposely selected to conduct key informant interviews. The data gathering instruments were questionnaire, key informant interviews, and document analysis. The study followed statistical tests to test the research hypotheses. It applied Kruskal Wallis test of significance. The study involved strict respect for informed consent, voluntary participation, and confidentiality. The findings of the statistics tests indicates that respondents’ responses concerning autonomy of Woredas in planning and budgeting, revenue generation and retention, expenditure assignments were significantly different. This implies that there is absence of uniformity in the practices of these aspects of fiscal decentralization in the city. On the contrary, the respondents’ response concerning the functionalities of institutional and legal frameworks, inter-governmental fiscal relations, challenges, and constraints of fiscal decentralization, were not significantly different. In general, the practice of fiscal decentralization in the city was limited as existing institutional and legal frameworks were in short of clarity and uniformity. Respondents stated that Woreda administrations had weak revenue base, and need clear planning and budgeting, and expenditure assignment autonomy. Based on the findings of the study, the research hence recommended that existing institutional and legal frameworks should be structured in the way that it enables Woreda administrations to generate and utilize sufficient revenues, plan and budget their own activities, have clear autonomy of expenditure assignments. Inter-governmental fiscal relations should also be planned to reduce the vertical imbalances observed at Woreda Administration level.


A Thesis submitted to the Collage of Business and Economics Department of Accounting and Finance in Addis Ababa University in Partial Fulfillment of the Requirements for the Degree of Masters of Science in Accounting and Finance.


Decentralization, Expenditure assignment, Fiscal Decentralization, Revenue assignment