An Analysis of Contributory Factors to Low Own Sources Revenue (OSR) in Local Authorities in Zambia: A Case Study of Muchinga Province
Authors: Mwale Naaman ,   ZCAS University, School of Business, 10101, Hapompwe Chrine C. ,   ZCAS University, School of Business, 10101
Published: July 2024

The study aimed at analysing contributory factors to Low Own Sources Revenue (OSR) in Local Authorities (LAs) in Zambia case studying Muchinga Province. The study was guided by three objectives which were: to review the existing legislation that supports the Local Authorities to collect their own source revenue; to assess the Local Authorities' revenue collection methods and their efficacy, and to design a model to be used to improve the Local Authorities’ own source revenue in Muchinga Province and other regions. The study used primary data which was obtained by means of individualized questionnaires and in-depth interviews. Using the Survey Monk formula, the targeted population was 1,000 of the local authority employees, civic leaders, and local business owners of small and medium-sized enterprises (SMEs) that pay taxes to the local authorities in their respective districts from which the sample size of 300 was obtained. The response rate was 66%. Random and purposive sampling techniques were used. The findings of the study revealed that the legislative frameworks, measures, and remedies were not sufficient in enhancing revenue collection by local authorities and that these local authorities largely dependent on the legislative framework, measures and remedies in revenue generation. The findings further showed that there was a belief among the respondents and interviewees that the revenue collection strategies were inappropriate for the local authorities. The interviewees also stated that the manner or method of assessing revenue collection was not effective at all as the local authorities mainly assessed the existing revenue collection’s efficacy through open meeting with the extent of revenue generation strategies and mobilization model being perceived to be poor. The results of the study clearly showed that local authorities are not effective in their collection of revenue and as such there is need for the local authorities to review existing legislation, methods of revenue mobilization and design a model that can enhance revenue collection in their Jurisdiction. Therefore, the study strongly recommended that the legal framework supporting revenue collection needed to be harmonized or reviewed to allow the Local Authority to exercise its full potential in OSR. The study further recommended that local authorities be computerized in all its revenue sources to minimize red tapeism, revenue pilferages / leakages, and corruption in revenue collections and accounting. The study further recommended the adoption of the internationally accepted Tax Administration Diagnostic Assessment Tool (TADAT) framework for Tax and Non-Tax Revenue Administration which should be the starting point, which focuses on nine key performance outcome areas that cover most revenue generation, administration functions, and processes. These areas include integrity of the registered revenue data base, effective risk management, supporting voluntary compliance, timely filing, timely payment, accurate reporting, effective dispute resolution, efficient revenue management, and accountability and transparency.