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
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