A Review of Fiscal Decentralization Practices in Ethiopia (original) (raw)
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PanAfrican Journal of Governance and Development, 2021
The study's main objective was assessing the practices and challenges of fiscal decentralization at Bedelle woreda, with particular reference to basic selected sectors (Education, Agriculture, Health, Water, and Road). According to the nature of this study, a descriptive research design with qualitative and quantitative methods was adopted. The population of the study was government employees working in selected sectors of Bedelle Woreda. The census sampling technique was used in this research because the study population was manageable. To this effect, 128 participants were selected using a census sampling size. Besides this, Woreda (District) Finance and Economic Development and Woreda Revenue Office Authority officials were purposely selected to conduct interviews. The data-gathering instruments were questionnaires, key informant interviews, and document analyses. Descriptive and inferential statistical techniques were used for data analysis. In descriptive using frequencies and percentages and inferential statistics, multiple linear regression was used to assess relationships between the independent variables (legal framework, revenue, expenditure, employee experience, employee training, management commitment, and fiscal transfers) and the dependent variable (fiscal decentralization). The findings show that internal revenue raising and utilization in the selected sectors was very low. Besides, lack of autonomy in expenditure decisions of sectors, insufficient capacity building, the extent of fiscal transfer, and financial resource were the major challenges-0.164, = 0.525, p<0.05), positive effect on fiscal decentralization. Based on the study's findings, it is recommended that existing legal frameworks be modified to enable the sectors to use their budget in line with their action plan to generate and utilize sufficient revenues. Special emphasis should be given to an employee's capacity building, independence of planning and budgeting, and clear autonomy of expenditure assignments. Intergovernmental fiscal relations should also be planned to reduce the horizontal imbalances observed at selected sectors of the woreda under study.
2014
1.1 BACKGROUND OF THE STUDY Ethiopia has had a long tradition of centralist government structures. However, the situation changed, at least in theory, when the current government 1 assumed power in 1991, proclaiming a decentralized form of government in its 1995 constitution and making the country a federal democratic republic. The constitution called for the establishment of a government structure that has four tiers: federal, regional, woreda (district) and kebele 2. The first wave of decentralization was centered on creating and empowering regional governments. Accordingly, regional states were empowered, among other things, to issue regional constitutions and other laws, and plan and execute social and economic development programs (Tegegn, 1998; Yigremew, 2001). The federal constitution does not state the powers and functions to be devolved to woreda governments. Instead, it puts an obligation on regional governments to establish woreda administrations and to provide them with adequate powers. In practice, however, regional governments had often been reluctant to devolve power, thus denying woredas the opportunity to exercise such devolved powers (Worku, 2005; Tegegn and Kassahun, 2007). However, realizing the importance of devolving power to woreda governments as the only means to promote genuine forms of democratic decentralization and to bring government closer to the people, the Amhara Regional Government along with three other larger regional governments 3 (including Oromia; Southern Nations, Nationalities and People's Region; and Tigray) has put in place a series of measures to push decision making authority and public service delivery to the woreda level. This is known as the second wave of decentralization (Worku, 2005). 1 The Ethiopian People Revolutionary Democratic Front (EPRDF) came to power in 1991overthrowing the communist Derge regime after 17 years of guerrilla fighting. After a number of elections the EPRDF is still in power. 2 Kebeles are formed in a geographical area which is inhabited by 5,000 or more people. So far kebeles do not have their own functions and budget. Rather they work as delegated branches of their woreda administration 3 The Ethiopian Federal Government has 9 regional states and 2 city administrations CHAPTER 1: INTRODUCTION Proclamation No.59/2001 of the revised constitution of the Amhara Region provides for district level decentralization. Accordingly, although woreda administrations are recognized as hierarchically subordinate to the regional government in a number of respects, they also now have the power to prepare and decide on economic development and social service plans within their own territorial area. This proclamation not only separates the three organs of government at woreda level (Woreda Council, Woreda Executive and Judiciary) but also clearly defines their respective responsibility as well as authority. This woreda level decentralization is not limited to the political and administrative dimensions of decentralization, but also includes fiscal decentralization which provides woreda administrations with the power and responsibility to raise, allocate and spend public resources according to the needs of the local community
Fiscal Decentralization and Subnational Revenue: Experience of the Emerging Region of Ethiopia
Journal of Economics and Sustainable Development, 2014
This study focuses on the subnational governments' revenues, their productivity and contribution to the total budget of the region. In Ethiopia, the regions get significant amount of revenue from the central government's block grant and their revenue sources generate very small amount of revenues and their tax bases are also very narrow. The study describes the revenue contribution of tax and non-tax bases separately and their trends throughout the periods. Moreover, it distinguishes specific revenue sources and their productivity, consistency of revenues from specific sources to finance local needs, and challenges in administration of their own revenue sources.
Fiscal Management in Dangila Municipality, Ethiopia. Performance and Policy Implications
Fiscal decentralization is one component of decentralization that gives authority to local governments to collectrevenue through taxes and responsibility over spending decisions. Even though fiscal decentralization has givenrevenue raising and spending decision powers to lower levels of government, the implementation process hasoften been a daunting task for many local authorities in the developing world. In the case of Ethiopia,decentralization has been implemented since 1991. However, revenue raising and expenditure management arenot efficiently and effectively exercised, especially in lower level government units of Ethiopia. Insufficient revenuecollection and reprehensible expenditure management leads to financial incapability such that public infrastructureand services could not be financed amply. Dangila municipality faces the problem of financial capacity to deliverinfrastructure and services to its citizens. While a number of studies have documented the financial incapacitie...
Fiscal Decentralization : Experiences of Selected Countries
1994
Similarly, even more dramatically, pressures are at work in Ethiopia as it is attempting to grope with the issue of decentralization. Since its assumption of power in 1991, the Transitional Government of Ethiopia (TGE) has been busy setting new systems of centre-region fiscal relations. Although some legal preconditions are already established, promulgation of the basic legal framework for the newly adopted system -the Constitution has yet to take place.
2018
This research was conducted on fiscal decentralization in Ethiopia with the case of primary sectors of Sibu Sire Woreda, East Wollega Zone, Oromia Regional State. To attain the objective, researchers relied on primary data followed by secondary sources. To obtain primary data, a mixed approach with the descriptive design was considered. Probability and non-probability samplings were employed to get the sample of size of 96 whereas nonprobability sampling technique was used to select 18 key informants' interviewees (KIIs) and 7 participants for focus group discussion (FGD). The findings of this research revealed that the principle of fiscal decentralization that is the autonomy of sectors is not found in practice. The selected areas were highly dependent on the allocated regional grant and had minimal capacity (null in some industries) to generate internal revenue. The expenditure responsibilities of the five selected sectors in the Woreda were limited to recurrent expenditures except for the road sector and some extent water sector. Data proved the existence of both vertical and horizontal imbalances in terms of revenue generation capacity and percentage of budget share of each industry that ultimately hinder the fiscal autonomy of the sectors in particular and that of the Woreda and local government in general.
Fiscal Decentralization in Addis Ababa City Administration, the case of Bole Sub-city (Ethiopia).pdf
Abstract In order to effectively carry out decentralized functions and be able to efficiently discharge expenditure responsibilities, sub-national governments need to have an adequate level of finance either raised local from their own source of revenue or transferred from higher level government and decision making discretionary power. The AACA devolved fiscal powers since the ratification of city charter in 2003 to its tier of governments with the objective to improve and enhance public service efficiency, effectiveness and to ensure growth and development within their respective administrative jurisdiction. However, Bole sub-city administration still unable to achieve and ensure the intended outcomes of fiscal decentralization and instead faces various problems. Numerous reports indicate that, the main problem resides on unsatisfactory revenue collection performance relative to its taxable/economic potential on one hand and inability to address the ever increasing needs and preferences of its constituents on the other hand. Thus, the main focus of this paper is to examine and analyze the practice as well as legal bases of aspects of fiscal decentralization in Bole sub-city. Both primary and secondary data sources were used to gather adequate and relevant data so as to answer the research questions. Officials and expertise from City BoFED, Bole Sub-city and woredas, ERCA Bole sub-city small tax payers’ branch offices were sources of primary data collected through interview and questionnaires. While secondary data was also collected from the stated institutions. Qualitative type of research was employed to obtain the required data and descriptive analysis method was used to analyze particularly the data acquired from primary sources and is supplemented by statistical data obtained from secondary sources. The findings obtained from the undertaking of the research reveals that, the annual budget allocated by the city administration indirectly determines the quantity as well as the quality of sub-city’s public service provision and is impossible to discharge expenditure responsibilities beyond the available fund. Substantial amount of sub-cities budget lost before it reaches to service provider sector offices. Legal mandate as well as the actual practice of the sub-city proves that, the sub-city has no devolved own source revenue generation and direct utilization discretionary power and is 100% dependent of intergovernmental transfer made from city administration. During the period 2011/12 to 2013/14 fiscal year, the sub-city received total budget assignment of 43.63% of the revenue generated from its jurisdiction of which only 31% is actual utilized. Revenue sharing assignment with the method of derivation approach over formula approach is an alternative choice recommended by the researcher. Thus, the current revenue sharing formula has to replaced by derivative approach with an associate revenue assignment of 55% of the revenue generated or collected within its boundary to Bole sub-city.
Implementing Federalism in a Developing Country: The Case of Ethiopia, 1995-2020
2022
This thesis assesses the implementation of federalism in a developing country by taking Ethiopia as a case. The thesis took the notion that in federations like Ethiopia, marked by developing economies, dominant party regimes, authoritarian tendencies and ethnic diversity, there are gaps between the constitution and the practice of regional autonomy. As such, the thesis systematically explores the gap between de jure and de facto by measuring regional autonomy and explaining the main drivers and instruments of de/centralisation. Regional autonomy is disaggregated into legislative, administrative and fiscal autonomy. Then, regional autonomy on two policy areas and five fiscal categories is systematically measured. The thesis reveals that the Ethiopian federation experienced centralisation over time in defiance of the constitution. The thesis shows that one of the features of Ethiopian federalism is limited regional own-source revenues. Further, centralisation of concurrent revenues an...