COLLEGE OF BUSINESS AND MANAGEMENT SCIENCE
REVENUE MANAGEMENT AND SERVICEDELIVERY IN LOCAL GOVERNMENTS. A CASE OF WAKISO DISTRICT
LOCAL GOVERNMENT
By
MIREMBE NAMISANGO ESTHER
07/U/10400/EXT
SUPERVISOR: MR. BAKUNDANA MARTIN
A RESEARCH REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
AWARD OF THE DEGREE OF BACHELOR OF
COMMERCE OF MAKERERE
UNIVERSITY
MAY, 2011
1
DECLARATION
I, Mirembe Namisango Esther, declare that this research work herein, is a product of my un-reserved efforts and has never been submitted in any University or higher institution of learning unless stated otherwise.
Signed…………………… Date………………………
Student: MIREMBE NAMISANGO ESTHER
APPROVAL
This report has been prepared under my supervision and is ready for submission to the university with my approval.
Supervisor
Signature ……………………….. Date……………………
MR. BAKUNDANA MARTIN
DEDICATION
This research is dedicated to my mother Mrs. Nyonyintono Teopista for all the efforts rendered to me during the course of my studies, my supervisor Mr. Bakundana Martin, my long time friend Ngoobi Karma, my son Namugala Emmanuel Victor, my sisters and brothers, freinds and other family members who contributed towards my course completion.
ACKNOWLEDGEMENT
I wish to take this opportunity to acknowledge all people who helped me in carrying out my research study.
First I thank the almighty God for the wisdom, knowledge and understanding and also for His financial provision thought my studies.
Secondly, I thank my supervisor Mr. Bakundana Martin for the efforts he put in to guide me in all areas concerning this work so that it is completed in time.
Thirdly, special thanks go to my mother Mrs. Nyonyintono Teopista who cared for me during the academic struggle and the financial support she sacrificed for me to complete my course and this work.
I also extend my sincere thanks to my long time friend Ngoobi Karma for the advice and all the support he rendered during my study.
Lastly I take this opportunity to thank each and every body who contributed greatly towards the completion of my course.
With all those words, may the Lord reward you abundantly.
ABSTRACT
Service delivery has been inefficient in both individual and public circles; this has been attributed to poor revenue management characterized by corruption and embezzlement amongLocal Government officials. The purpose of thestudy therefore was to establish the effectiveness of revenue management on service delivery in local government.
The objectives of the study included; examining the effectiveness of revenue management, assessing the quality of service delivery and establishing the relationship between revenue management and service delivery in Wakiso district.
The study was quantitative and enlisted data from 50 respondents who were randomly selected. The sample involved 3 stratified categories of people namely; the Local Government Administrators, Local Leaders and theLocal Community, who were interviewed and some purposively selected respondents were given questionnaires to obtain data. Some data was however collected from secondary sources like text books,District final accounts and Journals.
Data processing and analysis was then doneinvolving editing, coding, classification and frequency tabulation of responses and the use ofBi-variate data analysis and Statistical Package for Social Sciences. (SPSS) to establish the relationship between revenue management and service delivery
The findings show that the Central Government is the major source of Local government funds and these funds are sometimes remitted late and insufficient to meet the District’s revised budget. This leads to delayed and low quality service delivery.
It was therefore recommended that the Central Government should increase on the funds remitted and also remit it in time so as to improve on the quality of services delivered.
TABLE OF CONTENTS
Page
DECLARATION
APPROVAL
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENTS
LIST OF TABLES...... ix
LIST OF ACRONYMS ……………………………………………………………...……….x
CHAPTER ONE: INTRODUCTION
1.0 Background of the study
1.1 Statement of the problem
1.2 Purpose of the study
1.3Objectives of the study
1.4 Research questions
1.5 Scope the study
1.5.1Content scope
1.5.2Time scope
1.5.3Geographical scope
1.6 Significance of the study
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction
2.1Local Government Revenue management.
2.2 Service delivery in local government
2.3Relationship between Revenue Management and Service Delivery
2.4 Conclusion
CHAPTER THREE:METHODOLOGY...... 11
3.0Introduction...... 11
3.1 Research design...... 11
3.2 Survey population and sample size...... 11
3.2.1 Survey population...... 11
3.2.2 Sample size...... 11
3.3 Sampling methods and procedures...... 12
3.3.2Sampling procedure...... 12
3.4Sources of data
3.4.1Primary data
3.4.2Secondary data
3.5Data collection methods
3.6Data processing, analysis and presentation.
3.6.1Data processing
3.6.2 Data analysis
3.6.3Data presentation
3.7Limitations to the study
CHAPTER FOUR:PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS....16
4.0 Introduction...... 16
4.1 FINDINGS ON CHARACTERISTICS OF RESPONDENTS;
4.1.1Findings on gender of respondents
4.1.2Findings on age of respondents
4.1.3Findings on Marital status of respondents
4.1.4Findings on education status of respondents...... 19
4.1.5Findings on employment status of respondents.
4.2 FINDINGS ON EFFECTIVENESS OF REVENUE MANAGEMENT
4.2.1 Findings on sources of Revenue...... 20
4.2.2Findings on participation in use of revenue...... 21
4.2.3 Findings on expenditure onservices...... 22
4.3FINDINGS ON QUALITY OF SERVICE DELIVERY
4.3.1 Findings on services delivered...... 23
4.3.2 Findings on the quality of education
4.3.3 Findings on the quality ofproduction and marketing
4.3.4 Findings on quality of roads...... 29
4.3.5Findings on quality of Water and sanitation
4.3.6Findings on the quality of Health care services
4.4 FINDINGS ON RELATIONSHIP BETWEEN REVENUE MANAGEMENT AND SERVICE DELIVERY
4.5 FINDINGS ONCHALLENGES AND POSSIBLE SOLUTIONS OF REVENUE MANAGEMENT AND SERVICE DELIVERY
CHAPTER FIVE:SUMMARY, CONCLUSIONS AND RECOMMENDATIONS.....38
5.0INTRODUCTION...... 38
5.1 SUMMARY OF FINDINGS....... 38
5.1.1 Summary of findings on Revenue management...... 38
5.1.2 Summary of findings on service delivery...... 38
5.1.3 Summary of findings on the relationship between revenue management and service delivery.
5.2 CONCLUSIONS
5.3 RECOMMENDATIONS
5.4 AREAS FOR FURTHER RESEARCH
REFERENCES...... 42
APPENDICES...... 43
LIST OF TABLES
Table 3.2. 1: showing estimated respondents
Table 4.1. 1; showing gender composition of the respondents
Table 4.1. 2; Showing age groups of respondents
Table 4.1. 3; Showing marital status of respondents
Table 4.1. 4; Education level attained by the respondents...... 18
Table 4.1. 5; showing employment status of Respondents
Table 4.2. 1; showing contribution of various revenue sources
Table 4.2. 2: Showing participation in use of revenue
Table 4.2. 3; showing expenditure on services during 2007/08 – 2009/10
Table 4.3.1: showing participation in services delivered...... 23
Table 4.3. 2; Showing number of government institutions in Wakiso district
Table 4.3. 3; showing the ratio of pupils to staff, services and scholastic materials
Table 4.3. 4; showing government paid staff in Wakiso district
Table 4.3. 5; Showing deviation between the revised budget and actual amount remitted
Table 4.3. 6; showing agricultural inputs given to farmers...... 27
Table 4.3. 7; Showing technologies promoted by NAADS
Table 4.3. 8; showing roads in km contracted within 2007/08 – 2009/10...... 29
Table 4.3. 9; showing hospitals and health units...... 31
Table 4.3. 10; constructed and upgraded health units in recent years...... 33
Table 4.4. 1; showing whether service delivery is affected by proper revenue management.34
Table 4.4. 2; Correlation table showing the relationship between revenue management and service delivery
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LIST OF ACRONYMS
AIDS:Acquired Immune Deficiency Syndrome
DDHS: District Director of Health Service
HDPE:High-Density Polyethylene
HIV:Human Immunodeficiency Virus
LGBC: Local Government Budget Committee
LGDP:Local Government Development Program
LGFC: Local Government Finance Commission
LGs:Local Governments
NAADS: National Agricultural Advisory Service
NERICA:New Rice for Africa
NMS: National Medical Stores
NPPA:National programme priority areas
NSDS: National Service Delivery Survey
PAF:Poverty Action Fund
PFA:Prosperity For All
PMA: Plan for Modernization of Agriculture
SFG:School Facility Grant
SPSS:Statistical Package for Social Sciences
UPE:Universal Primary Education
UPPAP:Uganda Participatory Poverty Assessment Project
USE:Universal Secondary Education
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CHAPTER ONE
INTRODUCTION
1.0Background of the study
Revenue management is defined as a technique by which income is optimized, and how it is used to benefit a particular organization.From local government point of view, revenue is got from different sources like taxes, licenses, fines and grants from the central government. Local governments are accountable to the central government on the use of funds sent as grants and those locally raised. Hence one of its major revenue management practices are revenue collection, accounting, reporting, budget preparations and implementation of strategies set up by the central government.
Wakiso District is located in Central Uganda with its headquarters in Wakiso town which is located on the Kampala - Hoima highway, approximately 19 kilometers (12miles) Northwest of Kampala. It was created by the Act of Parliament in the Year 2000. It is the third most populated district in Uganda and the second biggest after Mukono with a population of, 1,260,900 people as per projected population 2010 of the Uganda Bureau of Statistics. It is 2,705 square kilometers in size with a mission “To serve the district through coordinated delivery of services, which focuses on National and local priorities to promote socio – economic development of the district.”
The district should be credited for its extent of service delivery; it has 19 government dispensaries (II), 51 health centres of grade II, III, and IV and one government hospital that is; Entebbe hospital. Entebbe has a fair network of tarmac road, a tarmacked 1 kilometer road has also been constructed from Wakiso town to the district headquarters, and there are 249 primary government schools in the district and 18 secondary government schools. Several springs and boreholes have been put in places of Kavumba, Namusera, Kkona, Ssala and Kayunga. Implementation of the NAADS by the district local government has also been of significance to the local populace in improving their standard of living. Yet still in 2008 the Wakiso district council approved the construction of 5 modern markets worth 3b which could create over 1,000 jobs one of them is the Wakiso central market located in Wakiso town.
However solid waste management has been a challenge to the district in terms of collection, transportation and disposal. For example, Wakiso town council lacks land filler disposal site. There exists no single skips deposit or truck for this purpose according to the health service analysis in the three year development plan 2010/2013 of Wakiso town council.
However, it should be noted that the extent of service delivery in Wakiso district has been highly affected by revenue management practices at the district head quarters; Conditional grants allocated to districts are not transferred directly to the budgets of Lower Local Governments; below the districts and municipal levels like sub counties. Usually Wakiso district plans, hires contractors, suppliers or service providers, deliver goods or services and makes the necessary payments through the district budgets and arrangements. (Local Government Finance Commission Annual report 2005). This has affected service delivery at lower local governments due to high levels of embezzlement and mismanagement of funds by higher officials at the district.
1.1Statement of the problem
Despite the fact that Wakiso District local governmenthas put strong political commitment to the principle of improvement in revenue management, through significant recruitment of well qualified staff, establishment of the internal audit department and improvement of the administrative and technical competence, revenue is not adequately managed.
The anti – grant structure to implement issues of transparency and accountability regulations was also put in place by the central government, but this has also nothelped much to address cases of fraud and embezzlement of funds.
Expenditure on delivery of development projects meant for local populace both at district and lower government remains very low (Auditor General’s Report 2009/10). The health service analysis in Wakiso Town Council according to the three year development plan 2010/2013shows that 50% of Wakiso Town Councilresidents live under slum conditions. The sanitation level within the town is poor with cases of homes without pit latrines and where they exist they are in a poor state. Worse still, there exists no single public toilet in the whole town.The study therefore is to find out more about revenue management and service delivery in Wakiso district local government.
1.2Purpose of the study
The purpose of the study was to establish the effectiveness of revenue management on service delivery inWakiso district.
1.3Objectives of the study
- Toexamine the effectiveness of revenue management in Wakiso district.
- To asses the quality of service delivery in Wakiso district.
- Toestablish the relationship between revenue management and service delivery in Wakiso district.
1.4Research questions
- How effective is revenue management in Wakiso district?
- What is the quality of service delivery in Wakiso district?
- What is the relationship between revenue management and service delivery in Wakiso district?
1.5Scope the study
1.5.1Content scope
The study was about revenue management and service delivery. Revenue management includes; management of funds sent from the central government in form of grants, and locally raised funds in form of taxes, fines, licenses through accounting, planning, and preparation of budgets, reporting and implementation of government strategies to development,where as service delivery refers to expenditure on health services, roads, education, community development services and production services.
1.5.2Time scope
The research covered a period of three years ranging from financial year 2007/08 – 2009/10.
1.5.3Geographical scope
The research was carried out in Wakiso district. Justification for choice of Wakiso district governmentwas easy access to information, geographical spread and availability of audited final accounts for most of the lower governments for the period under review.
1.6Significance of the study
The study issignificant in generating new information on revenue management and service delivery,understanding the relationship between revenue management and service delivery in local governments. It is also important to policy makers at local governments’ level, so this study can be beneficial to local governments if they are to perform better in revenue management and consequently better service delivery to the people.
The findings from the study can also give deeper understanding on the importance of identifying revenue management impediments and therefore help to improve on service delivery.
Other academicians interested in revenue management and service delivery can learn from it and expand their research.
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
There have been enormous studies in relation to revenue management and service delivery especially in developing countries, though little has been about local governments. The literature reviewed in this study is mainly about studies carried out in developing countries including Uganda in relation to its applicability to Wakiso district.
2.1Local Government Revenue management.
Local government has been defined as being the infra-sovereign geographical unit contained with a sovereign nation or quasi-sovereign province state, sub-municipal units. (Wazarwali. 1998; Stigliz (1985) defines revenue management as identifying and registering a tax payer and defining, assessing individual tax payer’s income, then fixing a rational system of rates and finally collection. Bird (1991) asserted that if tax payers are identified and registered compliance will improve.While revenue is the value of output supplied to customers thus for local governments are its residents.Monitoring systems according to Iga (2000) was given as an additional indicator for an effective tax system.
Management and collection of revenue is backed by a legal frame work both in the constitution 1995 (Article 152, 191 (1) and 196), the local government act (1997) (secs. 81 and 5th schedule) and financial and accounting regulations (1998). Villadsen(1996) argues that financial decentralization includes new systems for intergovernmental transfers, financial regulations, and local accounting and budgeting procedures.
The local authorities inspection report (2004) forwarded reasons for poor revenue performance to be; management and adherence to laws and regulations where in many cases the internal audit department of local governments are not properly staffed and facilitated to do work, while in the higher local governments, the finance department was not adequately monitoring and supervising the lower local governments. Local Government Finance Commission Annual report 2005 has it that the LGFC within the ambit of LGBC produced budget manuals to guide LGs in budget preparations.
2.2Service delivery in local government
A service oriented system has specific characteristics. First, any service delivery oriented system requires a business orientation that views the tax payers as customers. This therefore calls for placing a “high priority on delivery of personalized efficient customer service”(Moumey, 1991). Attitudes exhibited by service providers’ employees and managers must be aimed at developing good working relations and ensuring that customers are handled well while being served. Musgrave (1991), defined public sector as those industries and services in country that are owned and run by the state, such as education and the railways in comparison with the private sector. Thus service delivery entails public sector delivery mechanisms to the locals/residents of the local government.
According to the National Service Delivery Survey (NSDS) 2000, it was noted that effectiveness of service delivery in local governments can basically be gauged by the expenditure totals allocated to the various service items especially in regard to National Programme Priority Areas (NPPA). The report though included some other attributes like the local perception of the services and the level of achievements of value for money to determine the level of performance of local governments in achieving reasonable levels of service delivery to the resident tax payers.
Heskett (1987) defined service delivery as an attitudinal or dispositional sense,referring to the internationalization of the even service values and norms. Parasuram et al (1985) explained service delivery to include, reliability, tangibility, responsiveness, assistance and empathy; this therefore according to DavidLyon (1998) entails the engagement of the civil society in evaluating the quality of services. While Nangobi (2000) asserted that service delivery is concerned with supplying “superiorproducts” based on the opinion of the customer.
Kitimbo (1995) asserts that service delivery should be designed to provide maximum levels of location and time; Cowell (1994) confirms it by saying that location of services and their accessibility contributes to customer needs preference satisfaction. However, Fizt et al (1997) requires that service delivery should also take into account the completion rate and fault recovery rate by the service providers, and the league of Minnesota (2005) noted that since technocrats on behalf of the government undertake service delivery thus there is a need for “ bottom – up” priotising to have effective spending of public dollars.