Contribution of revenue enhancement plans to fiscal performance: A study of Local Government Authorities in Tanzania
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Date
2025-05-01
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal Of Research In Business And Social Science
Abstract
This study investigates the impact of Revenue Enhancement Plans (REPs) on fiscal performance—
primarily revenue collection—within Tanzanian Local Government Authorities (LGAs), focusing on
three representative councils: Mwanza City Council, Manyara Urban Council, and Mbeya City
Council. Employing a mixed-methods approach, the study integrates quantitative and qualitative data
collected from 400 respondents using a multistage sampling technique. Quantitative data were
analyzed using a Multivariate Ordered Probit model, which enabled the assessment of four key revenue
performance dimensions: effectiveness, increment, reliability, and efficiency. Findings indicate that
reducing revenue leakage and improving revenue forecasting accuracy significantly enhance revenue
performance. Revenue leakage exhibited a strong negative association with effectiveness (coefficient:
-1.221, p<0.01) and increment (-1.59, p<0.01), while accurate forecasting had a positive impact on
effectiveness (1.390, p<0.01) and increment (0.516, p<0.01). High implementation costs were
negatively associated with revenue growth (-1.634, p<0.05). In contrast, compliance positively
influenced reliability (1.533, p<0.01) and efficiency (1.029, p<0.01), reinforcing the importance of
regulatory adherence. These findings reflect persistent fiscal decentralization challenges in LGAs, such
as weak systems, limited institutional capacity, and inadequate planning. Policy recommendations
include implementing digital revenue management systems to curb leakages, strengthening forecasting
capabilities through staff training and data analytics, and promoting compliance through awareness
programs and enforcement mechanisms. Addressing these areas can improve fiscal performance,
enhance financial sustainability, and strengthen service delivery at the local level.
Description
Journal article
Keywords
Fiscal Decentralization, Local Government Authorities, Multivariate Ordered Probit, Policy Implications, Revenue Enhancement Plans