Framework for addressing drawbacks of central government fiscal transfers in Zambia

The Constitution of Zambia establishes a local government system where a sound
financial base is established for each Local Authority with reliable and predictable sources
of revenue. To ensure financial survival of Local Authorities; the central government
provides Local Authorities grants -to guarantee effective provision of municipal services.
Local Authorities, therefore, depend on central government grants and other statutory
allocations to meet expenditure. These grants are linked to central government’s
determined policies resulting in local authorities become dependent on them than on
internally generating revenues. This dependence has led to Local Authorities’ lax effort
in broadening revenue generating strategies. The result is a culture of poor financial
standing, inexplicable failure to engage in commercially viable investment programmes
and failure to accomplish decentralization process. This study therefore aimed at
providing a framework to eliminates drawbacks of central government grants and
facilitate the implementation of decentralization in Zambia. Data was obtained through
purposive and critical case sampling (using person to person interviews and questionnaire
interviews) as well as secondary data through literature reviews and content analysis of
local authority project documents. The methodology adopted a mixed method approach.
The key result of the interviews was the identification of measures being used to enhance
revenue generation. The interviews were also aimed at obtaining preliminary data which
was then used to enhance the questionnaire survey. The sample size for the questionnaire
was 102 computed at 95% confidence level with a 5% confidence interval. Data analysis
was quantitative and included use of descriptive statistics, analysis of variance and
multivariate analysis of variance to examine the relationships between variables. T-test
were also used. The results allowed conclusions on how to eliminate the dependence and
dominance relationship with central government, remove reliance on fiscal transfers
(grants) and induce local authority autonomy to guarantee local performance and
sustainability of income generation.
Keywords: Local authority, autonomy, grants, commercial investment, revenue,
decentralisation