Assessment of Financial Management of Urban Local Governments of Addis Ababa, Ethiopia
No Thumbnail Available
Date
2018-01-08
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AAU
Abstract
Municipal Financial management particularly the aspect of municipal revenue collection and
financing of municipal functions are important areas of concern in Addis Ababa. Addis Ababa
city administration is facing with an ever increasing demand for municipal services and this
challenge will continue in so far as the city continues to expand. This issue is directly linked to
the ability of the city administration in generating adequate and increasing revenue and in its
ability to efficiently utilize the available resources. The revenue enhancement plan of the city
shows that despite the untapped potential, the city couldn’t collect adequate own revenue that
can enable it serve residents of existing and new expansion areas. This study therefore, makes an
effort to explore whether expenditures for municipal functions is financed by own revenue; if
there are revenue lines that conflicts to each other or with that of state revenues; the cities
experience in terms of budget predictability and to look in to the contributing factors towards
revenue collection performance. Secondary data (plan and actual data for revenue and
expenditure) were used to make analysis of revenue performance over time and to assess
utilization capability of the city. Semi structured interview with officials of revenue bureau and
BoFED were carried out to collaborate the findings from the secondary data. In addition 60
respondents were purposively targeted from among residents of two subjectively selected
woredas to answer a research question. Distribution tables, charts, percentages and examination
of bases and timing of municipal revenue levies followed a descriptions and inferences were
employed to analyze data and information. The study has discovered that due to shortage in
municipal revenue collections, municipal functions are partly financed by state revenue. Budget
predictability problem is more on municipal revenue than state revenue and underutilization of
budget is commonly observed over the study years. Through the findings of the study, residents
aware of municipal revenues and do not have objection to the laws governing such revenues,
rather they feel that they are morally obliged to pay their share. However they believe that there
is discrimination among tax payers and claim that even for similar businesses the amount of tax
and municipal charges is not uniform. Nepotism and corruption are figured out at the top cause
for such discrimination