A Critical Examination of Fiscal Autonomy of Addis Ababa City Administration

Open Access

Abstract

This thesis paper describes the fiscal autonomy of Addis Ababa City Government using primary and secondary sources of data. The constitutional and legislative frameworks have been critically examined in order to determine whether they would create conducive environment within which Addis Ababa would be able to exercise optimum degree of autonomy in its local government. The study also incorporates close analysis of the revenue sources and the degree of control the City has over these sources; spending autonomy and fiscal importance as well as transfers and borrowing frameworks of the City. The findings of the study indicate existence of enabling environment in which Addis Ababa City Government can enjoy better degree of fiscal autonomy. With substantial expenditure responsibilities and productive revenue sources, Addis Ababa City government has the opportunity to strengthen its fiscal position. However, the increasing trend of its actual expenditure, Addis Ababa City Government is required to take appropriate actions to increase its revenue and involve the community in service provision process. It is also found in practice that except differences in their constitutional statues, Addis Ababa and Regions tend to have similar expenditure responsibilities and revenue powers. The major difference in their IGFRs goes to the size and system of Federal government transfers. While Regional governments are found highly dependent on block grant transfers, Addis Ababa is found relatively deprived of the transfer system. The study concludes that Addis Ababa City Government has better comparative and competitive advantages to exploit the geographic, economic and administrative opportunities to enhance its fiscal autonomy. Finally, the paper forwards important recommendations to policy makers and government officials as well as to prospective researchers