factors affecting revenue collection in Local authorities – a case of Sesheke Town Council

school of BUSINESS STUDIES

 

 

Department of Political and Administrative Studies

 

 

 

FACTORS AFFECTING REVENUE COLLECTION IN LOCAL AUTHORITIES – A CASE STUDY OF

SESHEKE DISTRICT COUNCIL

 

 

by

 

 

 

A REPORT Submitted in Partial Fulfilment of The Requirements

Of The bachelors Degree in COMMERCE ACCOUNTING AND FINANCE

 

 

 

JUNE2017

 

 

DECLARATION

 

I declare that the ideas, conclusion and recommendations herein this document is those of the author and where other people’s ideas have been used such have been acknowledged within the context of this subject. Therefore I declare that this work is my own and that the work of other people has been acknowledged and further outline that no duplicate whatsoever has been made to this research.

 

Date……………………………….               Signature………………………………………………………………………

Candidate

 

 

Date………………………………                Name ……………………………………..………………………….                                                                                                             Supervisor

 

Signature…………….…………….,,,,,,,…………………………..

Supervisor

 

 

 

 

 

 

 

 

 

 

 

 

 

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DEDICATION

 

I devote this paper to my almighty God, husband , daughter  son , Mother and my whole entire family, for being there for me, my sisters, brothers and my relatives who all supported me during my academicand encouraged me until the end of its production.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ACKNOWLEDGEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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                   Table of Contents                                                             Page No

Declaration………………………………………………………………………………                      i

Dedication ………………………………………………………………………………                 ii

Acknowledgements…………………………………………………………………….                    iii

List of tables, figures and boxes…………………………………………………………                        vii

Acronyms or abbreviations used………………………………………………………..                    viii

Abstract…………………………………………………………………………………                   ix

 

CHAPTER 1 – Introduction and Background of the study

  • Introduction……………………………………………………………… 1
  • Background of the study and situational issues ……..…………………….             1
    • Sesheke District Council ……………………..….…….…………………. 3
  • Statement of the problem………………………………..……………….. 4
  • Research objectives ………………………………………………..……. 5
    • General Objectives…………………………………………………….… 5
    • Specific Objective…………………….……………………………….… 5
  • Research questions…………………………………………………….… 6
  • Significance of the study..……..…………………………….………….. 6

1.6.1      To the management of Sesheke district council &other local authorities                      6

1.6.2      Future research………………………………………………………….                      6

1.6.3      To the government……………………………………………………….                     6

1.6.4      To stakeholders…………………………………………………………..                     7

 

CHAPTER 2 Literature, Review and Theoretical Review………………………….                   8

2.1          Introduction……………………………………………………………                      8

2.2          Theoretical Framework ………………………………………………..                  8

2.2.1       Stakeholder Theory……………………………………………………                        8

2.2.2       Systems Theory………….………………………………………………                     9

2.2.3       Theory X and Y…………………………………………………………                      9

2.2.3.1    Under Theory X……………………..………………………………….                     9

2.2.3.2    Under Theory Y……………………..………………………………….                    10

2.3          Empirical Reviews……………………………………………………..                      10

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2.4          Source of Municipal Revenue……………………………….……………      11

2.5          Factors Determining Revenue Collection.……………….………………                  11

2.6          Research gap…………………………..….…………………..…………..       14

2.7          Conceptual Frameworks:…………………………………………………       14

2.7.1       Internal control systems………………………………………………….                   14         .

2.7.2       Public Awareness…………………………………………………………                  15

2.7.3       Motivation………………………………………………………………..                  15

2.7.4       Corporate governance……………………………………………………                   15

 

CHAPTER 3: Methodology

3.1          Introduction……………………………………………………………….                 16

3.2          Research Design…………………………………………………………..                                        16

3.3          Area of Study ……………………………………………………………..                16

3.4          Population of the study..…………………………………………………..                                    17

3.5   Unit of Inquiry……….……………………………………………………                                            17

3.6Sampling Technique…….…………………………………………………                           17

3.7         Types of Data..……………………………………………………………..                                        18

3.7.1.     Primary data…………………………………………………………………               18

3.7.2      Sources of data……….……………………………………………………..                18

3.8         Data Collection Tools……………………………………………………….               18

3.8.1      Questionnaire………………………………………………………………..              18

3.8.2      Interviews……………………………………………………………………              19

3.8.3      Documentary Review………………………………………………………..              19

3.8.4      Observation…………………………………………………………………..             19

3.8.5      Data Analysis Technique……………………………………………………..              20

 

CHAPTER 4: Results and discussion

4.1          Introduction…………………………………………………………………                                     21

  • Profile of Respondents…..…………………………………………….……            21

4.2.1       Sources of Revenue and Volume of Collection………………………..……  22

4.2,2 Sources of Revenue……………………………………………………..…..                    22

4.3 Volume of Revenue Collection at Sesheke District Council from

2008/2009 to 2012/2013………………………………………….…….……            23

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4.4          Management of Sources and Volume of Revenue Collection…………………      24

  • Reasons for Inadequate Management of Sources and Volume of

Revenue Collection……………………………………………………………       25

  • Actors and Mechanism of Revenue Collection………………………………. 25
    • Actors of Revenue Collection………………………………………………… 25
    • Effectiveness of Various actors on Revenue Collection……………………… 26

4.8          Mechanism of Revenue Collection…………………………………………….      27

4.10   The contribution of Various Factors on Revenue Collection………………….      29

4.11 Challenges facing SDC in Revenue Collection………………………………..      29

4.11.1 Factors Contributing to the Challenges Of Under-Collection of Revenue…….      29

4.12  Consequences for Low Revenue Collection……………………………………      30

4.13  Observed Effects on the Implemented Development Projects………………….      31

4.14  Methods Employed to Reduce the Problem of Revenue Collection……………      32

4.14.1 Level of Measures Taken to Reduce the Problem of Low Revenue Collection.      32

4.15        Chapter Summary…………………….………………………………………..      33

4.16  Limitation of Research………………………………………………………….     34

 

CHAPTER 5 Conclusion and recommendations

5.1          Introduction………………………………………………………………….                                    35

5.2          Research conclusions…………………………..……………………………                                  35

5.3          Research recommendations…………………………………………………            36

5.4 Evaluation of Research Questions…………………………………………..            37

 

References…………………………………………………………………………………           39

 

 

 

 

 

 

 

 

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LIST OF TABLES, FIGURES AND BOXES

 

Table 4.2.1 General Characteristics of Respondents

Table 4.2.2: Sources of Revenue Collection at Sesheke District Council

Table 4.3: Volume of Revenue Collection at SDC from 2008/2009 to 2012/2013

Table 4.4: Management of Sources of Revenue Collection

Table 4.5: Reasons for Inadequate Management of Sources of Revenue Collection

Table 4.6: Mechanism for Revenue Collection

Table 4.7: Effectiveness of Actors on Revenue Collection

Table 4.8: Performance of the Internal Sources of Revenue at SDC

Table 4.9: Performance of the Outsourced Sources of Revenue at SDC

Table 4.10: Effectiveness of various Mechanisms for Revenue Collection

Table 4.11: Factors Contributing for the Failure to Collect Revenue

Table 4.12: Contribution of Low Revenue Collection on Non-Implementation Of Projects

Table 4.13: Observed Effects on the Implemented Development Projects

Table 4.14: Level of Measures Taken to Reduce the Problem of Low Revenue Collection

 

Figure 2.7.1      Conceptual Framework

 

 

 

 

 

 

 

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ACRONYMS OR ABBREVIATIONS USED

 

AGM               Annual General Meeting

CEEC              Citizen Economic Empowerment Commission

CSO                Civil Society Organizations

COSO             Committee of Sponsoring Organization of the Treadway Commission,

DC                  District Council

F/Y                  Financial Year

GRZ                Government of the Republic of Zambia

JCTR               Jesuit Catholic Theological Reflection

LAAZ             Local Authorities Association of Zambia

LDCs              Least Developed Countries

LGA                Local Government Authorities

OECD             Overseas European Community Development

SDC                Sesheke District Council

STC                 Sesheke Town Council

TIZ                  Transparency International Zambia

VAT                Value Added Tax

ZNFU             Zambian National Farmers Union

 

 

 

 

 

 

 

 

 

 

 

 

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ABSTRACT

 

Sesheke District Council (SDC) like other councils across the country are gambling with survival strategies, government has been concerned about the escalating below standard performance ofthe local authorities and has instituted reforms to them which have cost the governmenthuge sum of monies.

 

Local authorities are blamed for poor planning of their mandate ofrevenue improvement, infrastructure and service delivery to residents.Revenue collectionhas become an issue in local authorities because of the financial problems they have beenexperiencing such as salary delay and difficulties in honoring their obligations as andwhen they fall due.

 

Local Authorities have been lacking funds to facilitate delivery ofsome essential services such as fire control and garbage collection in various towns.

 

All this indicators that local authorities have an issue in revenue collection

 

This study aimed at making an assessment on the factors affecting collection of revenues inSesheke District Council (SDC). The study specifically focused on identifying sources of revenue at Sesheke District Council and volume of collection by source; actors and mechanism used in revenue collection and finally establishing factors determining collection of revenue in the study area.

 

The paper sought to answer questions of the effect of the internal control system on revenue collection, effects of Corporate Governance on revenue collection, effects of public awareness on revenue collection and effects of staff motivation on revenue collection.

 

The study used multiple methodologies including survey questionnaires, in-depth interviews, and documentation analysis so as to increase richness of the research findings. Furthermore, sampling techniques was used to enable the researcher to reduce the amount of data needed to be collected by considering groups of people rather than the whole population.

 

It was found that, the Sesheke District Council (SDC) did not plan properly before decision of assigning the revenue collection function to revenue collectors (own revenue collectors or agents) is made.  Not all sources of revenues with the council were identified, documented and adequately studied to establish the potential amount to collect annually.

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Furthermore, the focus seems to be on very few sources while the need to widen revenue base was quite high. An overall conclusion is that the Sesheke District Council (SDC) lacks an effective and integrated approach to manage Revenue Collectors in its different revenue sources, lacks punitive actions to defaulters and Periodic monitoring and evaluation. The entire system of Managing the revenue collection need to be improved in order to make sure that council’s collect the intended revenue

P(5.u)                 

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