Strengthening Local Government Own Source Revenue 2019

I am delighted to present the research findings on “Strengthening Own Source Revenue in Zambia” which is an attempt in pursuit of the ideals of an adequately resourced local government sector able to effectively deliver on its mandate. Given the tight fiscal challenges facing local authorities in Zambia, it has become imperative to innovate and make the most out of the available own sources of revenue in an effort to sustain service delivery. There is a growing appreciation of a strengthened own source revenue base which could be used pragmatically to overcome the financial challenges for local authorities.

The Intergovernmental Fiscal Architecture (IFA) acknowledges the fact that local authorities’ Own Source Revenues (OSR) have in the past been low and have systematically deteriorated over time as the Central Government (CG) has often interfered with levies, exemptions and rate levels. For example, revenue sources, such as the crop levy were scrapped, exemptions granted, tax rates curtailed, thereby affecting OSR administration and dramatically reducing the ability of local governments to mobilize own revenue.

In most local authorities, property valuation rolls are either incomplete or out-of-date which is attributed to the cumbersome and expensive nature of the process, thereby reducing the local authorities’ ability to mobilize property rates which constitute the main source of OSR in most councils. At the same time, LG administrations have been relaxed, often without the needed capacity nor backed by adequate local political will to improve the equity, efficiency and revenue collection from the available local revenue instruments.

While it is obligatory on the part of Government to make transfers to local government, such transfers do not come when most needed and are not sufficient to meet the needs of all the 116 local authorities. This combined with the ever-increasing expenditure budgets (usually occasioned by outside forces) and the growing demand for quality municipal services, pose a financial and governance challenge on all local authorities regardless of size.

This research is one of the knowledge products from the EU/DFID supported “Enhancing Local Government Capacity for Development Project” which responds to the current operational odds facing local authorities. The research draws conclusions from data collected from four Local Authorities, two cities (Livingstone and Kitwe) and one municipal (Chongwe) and one district (Kaputa) where it was found that to a large extent the revenue yield of most local authorities are affected by laws, regulations and procedures that create the frameworks within which the revenue sources are operated. Better management and targeting gives local authorities room for optimising revenue yields from existing sources. It is the Association’s view that the recommendations of this research will translate into action for improved municipal service delivery.

Maurice Mbolela

Executive Director

LOCAL GOVERNMENT ASSOCIATION OF ZAMBIA

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