Fisical Decentralization in Somali National /Regional State

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Addis Ababa University


The thesis attempts to examine and asses the trends of fis cal decentralization in Ethiopia in general and Somali National Regional State in particular. Thi s is done first by allempt to place theoretical and empirical inv estigation. fO di scern asp eC lS of change and continuity in f isca l decentralization in Ethiopia. Th e sludy he lps to cril ica l ly se l OUI f act ors that are resp onsible for similarities and differences across years and put impli calion of the study accordingly. We develop indicators to measure the degree of decentralization both in Ethiopia and with regional case study. The fiscal decentralization indicators are revenue share between central and regional governments, expenditure share between center and regional governments and aspects of inter-governmental tran~fers. We also analyze expenditure assignment in light of own revenue which reveals fiscal capacities of reg ional and local government respectively. The research primarily inquires how fiscal decentralization is practiced in the regiOn. In ligh t of the above main objective it tries to see the overall impacts of decentralization on socio-economic background, capacity, planning and budgeting in th e region. The researcher applied a combination of quantitative and qualitative social research methods specifically; a case study. This is be cause tra cin g th e practice o(fiscal dec en trali:a lio l1 in mO Sf cases entails 'hall" and 'why' questions, which are hell er answered by case .H udi e.l· rather than resear ch designs such as surveys . The main conclusion that emerged Fom the study; higher degree of decentralization for recurrent expenditure than capital across years, low fiscal capacity of local government, diverse Fiscal capacity among regions to .fianc e expenditure responsibility out of own revenue sources. Previous studies on the is sue have made an allempt to generate consensus. They concluded that , weak revenue bases, capacity deficiency, tendency to decentralize expenditure than reve nue. However this study concludes diverse .fiscal capacity both at regional and local level of government provides evidence that, resource and tax bases, infrastructure coverage , institutional strength and some other geographical and socialfactors are not evenly distributed this provides an explanation /01' the fact that th e above variables may prevent/ul! use a/production fac tors critically indicating to give emphasis to each :,pecific var iahles and their dynami c link they have to each individual region based on each characlerislics. This in turn provided strong support f or Tegegne eral (2 0 0 7), Getach ew (2 002) , Melkamu (200-1) , Degefa (2003) tha t emerging re gions have very limited re source and sever .financing gap, potential and actual revenue collection indicat es that there is h uge difference between the two. This indicates the need to streng th th e mechanism for lo cal reso urce mobilization could in fact be the wayforward Key Wor ds: Fiscal Federa lism, St ate an d Local Taxation, Intergovel'llm elltal Relatio n



Fiscal Federa lism, St ate and Local Taxation, Intergovel'llm elltal Relatio n