The Effectiveness Of Outsourcing Revenue Collection In Local Government Authorities A Case Of Arusha City Council (Acc)

ABSTRACT

This study on the effectiveness of outsourcing revenue collection in Local Government Authorities was conducted in Arusha City Council (ACC). The purpose of this study was to determine whether ACC adheres to the important criteria in selecting the revenue collecting agents, to determine the influence of budget on outsourced revenue collection, and to determine whether ACC obtain expected outcomes from outsourced revenue sources. The focus was to determine whether outsourcing revenue collection was effective in attaining revenue collection objectives. A time-series research design was adopted whereby both primary and secondary data were used. The population relied on the approved and actual collection of outsourced revenue collections from 2009/2010 to 2018/2019 financial year (Quarterly data). Purposive sampling was used to select 5 local government staff of ACC revenue section whereby key informants’ interview was used to collect primary data. Data analysis was done by using STATA and Micro Soft Excel whereby content and descriptive analysis was used for the first and third objective. Multiple Linear Regression model was used to analyse the influence of the approved budget on the outsourced revenue collection. Findings revealed that ACC had 7 outsourced revenue sources covered by the study which were market levy, bus stand levy, toilet charges, waste charges, murram levy, weighbridge charges, and forest levy. Important criteria used in selecting revenue collecting agents by ACC were cost of outsourcing, experience, resource capability, and compliance with statutory obligations. The study found that there was no long-term relationship between the approved budget and actual collection since p - values were greater than 0.05, however, actual revenue collection had a relationship with previous period collection. Moreover, findings revealed an outstanding performance of the outsourced revenue collection of which most of the outsourced source recorded a performance of up to thrice the target. The study concluded that outsourcing revenue collection in ACC was effective during the period of 2009/10 – 2018/19 and recommended that ACC should ensure that revenue potentials of the outsourced sources are well exploited in order to effectively measure the performance of the outsourced agents.