Fiscal Decentralization in Benishangul Gumuz Region: A Review of Problems of Fiscal Imbalance

Bessie, Melkamu (2004) Fiscal Decentralization in Benishangul Gumuz Region: A Review of Problems of Fiscal Imbalance. Masters thesis, Addis Ababa University.

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Abstract

Many countries around the world have been attempting decentralization process to create or strengthen sub national governments for several reasons and with varying degrees of intensions and success. Ethiopia-with no exception- is among federal countries embarking on the process. Accordingly, ethnic based regional state governments are created. However, the process presumes appropriate assignment of power and resources to autonomous sub national governments. In Ethiopia, there is universal deficiency of regional own revenues relative to the assigned bulk of expenditure requirements. The vertical fiscal imbalance in Ethiopia is thus explained more by monopolization of the Central Government over the most lucrative tax bases and partly by high expenditure requirement of regional state governments. The other feature of decentralization in Ethiopia is the skewed distribution of revenue across the regions where by more than 88% of domestic revenue is collected in the largest four regions (Ahhara, Oromya, SNNP, and Tigrai ) while the smallest ( Afar, Somali, Gambella, and Benishangul- gumuz ) regions collect less than 6%. As a result federal transfers play a crucial role in closing the gap. However, the formula designed and the weight assigned to the variables has significant implication on the amount to be transferred to region. As regional governments in Ethiopia differ in their capacities, federal subsidy focusing more on population size is seen favoring the largest regions. Therefore, unless true measures of decentralization are taken, the existing vertical and horizontal imbalance is quite to exacerbate threatening the presumed benefits of decentralization. The practice in Benishangul Gumuz region shows neither the adequacy of own revenues nor adequate administrative capacity to utilize the existing resource. As a result, the over all fiscal position of the region shows its heavy dependence on federal subsidy at the same time woredas in the region are extremely dependent on transfers from the region Key word; Decentralization, fiscal capacity, fiscal imbalance, Federal government, Regional government, Decentralization Ratio, Own Revenues, Federal Revenues, Vertical Imbalance, Horizontal Imbalance, and Federal Grants.

Item Type:	Thesis (Masters)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HT Communities. Classes. Races
Divisions:	Africana
Depositing User:	Tim Khabala
Date Deposited:	08 Aug 2018 08:42
Last Modified:	08 Aug 2018 08:42
URI:	http://thesisbank.jhia.ac.ke/id/eprint/8403

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