Governance Arrangement and Inter Governmental Fiscal Relations of Capital Cities with their National Governments: the Case Study of Addis Ababa City Administration
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Date
2010-12
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Addis Ababa University
Abstract
Governance arrangement of capital cities and their inter-governmental fiscal relations with
national governments, particularly in federal countries, has started becoming one of the research
topics and agenda of discussion. It is in line with this direction that this paper focuses on
describing the governance arrangement of Addis Ababa and its inter-governmental fiscal
relations with the federal government, as the capital city of a federal government, seat of Oromia
state and African Union as well as a local government to its residents. In order to be able to
investigate the current status of the city in the national governance and finance structure, the role
and position of Addis Ababa city during the Imperial and the Derg Regimes has been critically
reviewed and analyzed. Moreover, the changes in the governance and inter-governmental fiscal
relations of Addis Ababa due to the adoption of ethnic-based federal system have been addressed
using the empirical experience of other federal capital cities. The position of regional
governments and urban local governments in the country’s governance structure is also described
briefly to determine the ways Addis Ababa is being governed differently from other sub-national
units. Furthermore, through qualitative and quantitative approaches, expenditure responsibilities,
revenue powers and access to transfers have been analyzed.
A general conclusion emerging from this thesis study is that the governance arrangement of
Addis Ababa is the most complicated and unique in the country mainly due to the challenge to
reconcile local, regional and national interests over the city. Additionally, the strong historical
attachment of the city with the nation-state formation process in Ethiopia, Addis Ababa has been
the main center of the country’s economic, political and business activities, and then has
relatively higher revenue bases with huge expenditure responsibilities. Contrary to the
expectation of the writer from other federal capital cities, Addis Ababa is found the only sub-
national unit of the country to be deprived from federal government transfers. The study has also
come up with important recommendations.
Basic Terms: Governance Arrangement, Intergovernmental Fiscal Relations, Ethnic Based
Federalism, and Fiscal Support
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Keywords
Governance arrangement, Intergovernmental fiscal relations, Ethnic based federalism, Fiscal support