An Assessment of the Effect of Revenue Collection on Local Authority’s Service Delivery in Zambia – a Case Study of Kalulushi Municipal Council

DOI Link: https://doi.org/10.59413/ajocs/v7.i1.11

Abstract

This study empirically investigated the effect of revenue mobilization and management on the quality-of-service delivery at Kalulushi Municipal Council (KMC). The study adopted a mixed research approach and used a sequential explanatory research design. The data used in the study was collected using a mixed research approach through a survey and in-depth interviews. The study sample was 100 local tax payers selected through simple random sampling technique and 30 experts in revenue and service delivery purposively selected using purposive sampling technique. Descriptive data analysis was done using statistical packages for social sciences (SPSS 24) for quantitative data and qualitative data was analyzed by using themes. Correlation and Regression analysis were the main empirical analysis approaches for the quantitative data. The Findings of this study revealed a strong correlation (r=0.874) and a substantial regression (R= 0.759) between revenue collection and the quality-of-service delivery at KMC. The study revealed that KMC relied heavily on mining firms as their main source of revenue collection with 56% from the total revenue sources. The study also revealed revenue collection mechanisms at KMC are inefficient as the council mainly rely on the use of manual systems. However, the study revealed that the revenue collection strategies employed at KMC was effective. This was due to the payment plan and discount strategies which increased the collection of revenue whenever employed. The study further revealed that KMC faced challenges in its quest to collect revenue which included non-compliance from taxpayers, inadequate IT Infrastructure and logistical challenges. The study therefore recommended that the council should establish more revenue sources in order to reduce overdependence on one source. It was also recommended that the local authority should undertake more stakeholder sensitizations on the importance of paying tax to the council. It was further recommended that the local authority should invest in IT Infrastructure and use digitalized payment systems in order to reduce revenue leakages and address the issue of transport under revenue section. In addition, the study recommended that the council should continue with its current revenue collection strategies and introduce more of such strategies in order to maximize on the collection of revenue.

Keywords: Revenue collection; Assessment; Service delivery; Local Authority; Collection Strategies

Introduction

This study aims to assess the effect of revenue collection on Kalulushi Municipal Council (KMC) with regards to its service delivery. Revenue collection is a topic of great challenge faced by local authorities such as KMC. Much attention has not been paid with regards to the effects revenue collection has on service delivery. Little research has been done on this topic.

According to the local government act of 2019, local authorities are part of the governance system that play an important role in the equal distribution of public resources to citizens at local level through service delivery. In southern Africa, particularly Zambia, local authorities have received heavy criticism for poor service delivery in recent years due to numerous challenges, the major one being financial (LGAZ, 2022). This criticism is not only from the local communities but from central government as well. Criticism in most cases has resulted in community protest which are deemed detrimental. This forces local authorities to look for means of satisfying the needs of the communities. According to (Fjeldstad, et al., 2012) local authorities strive to meet people’s demands for goods and services in order to achieve their objectives for which they were created for.

A local authority is a branch of government that is closer to the community, which provides basic quality services, safety, jobs and other necessities (Kawana, 2023). Local authorities are separate established branch of government with primary responsibilities for service delivery. It is of the general view that, local authorities in most African countries such as Zambia are in most cases characterized with negativities such as overwhelming demand for service delivery, huge service backlog, poor long-term planning and increase in institution wage bills.

Good service delivery is important for the development of any country especially the developing countries in Africa such as Zambia. This is because it leads to quality, smarter and effective management of public resources, in order to ensure that citizens access the required services that enhance their economic growth and overall well-being (Hatanti, et al., 2022). These services include, water and sanitation, waste management, public health care, infrastructure and social welfare.

In the post-Independence period, Zambia faced numerous challenges in local authority’s service delivery, which led to the introduction of the local government act in 1965. There have been several amendments on the act up to until the current amendment in 2019. The act gives a strong affirmation that local authorities are a branch of government that interacts with the community at the grassroot level. It further affirms that local authorities were created to serve as partners to central government in order to foster national development. The local government Act stresses the importance of local authorities. It stresses that a local authority is a pillar of public service delivery at a local level, fulfilling the needs of local communities. The Act also distinguishes the types of local authorities in Zambia as being town, municipal and city councils with city council being the highest in ranking, Municipal council in the middle and Town council ranks the lowest.

Local authorities are mandated to carry out specific duties within their boundary of jurisdiction as stipulated in section 16(2) schedule 4 of the local government Act No.2 of 2019. The Act outlines the specific duties local authorities has to undertake which include, public safety, infrastructure maintainace, water & sanitation, road and drainage maintainace, public health, streetlighting, solid waste management, markets & bus station management and land administration (Local government Act, 2019).

Local authorities should exercise their functions in such a manner that increase the social development of communities, particularly in meeting the needs of the poor with emphasis on the growth of the local economy (Fjeldstad, et al., 2012). Fjeldstad et al (2012) further suggested that local authorities exercise a great influence over the social and economic wellbeing of local communities.

World over, service delivery is deemed critical, especially in the provision of public goods and services for both developed and developing countries although with different levels of efficiency and effectiveness. In developed countries such Britain and the USA, service delivery at local level is more efficient and effective as compared to most African countries marred with political and economic issues (Adah, 2022). Service delivery in southern African countries such as Namibia, is regarded as number one priority although local authorities fail to perform adequately due to poor revenue collection as a result of poor customer attitude to pay for services (Kawana, 2023). According to Nhema and Tawanda, political interference is the major cause of poor service delivery by local authorities in Zimbabwe (Nhema & Nyikadzino, 2015).

In Zambia, service delivery has been a topic of debate for some time now. According to World Bank, 49% of Zambians in rural and 11% in urban areas respectively have no access to clean drinking water and 79% in rural and 51% in urban areas respectively has no access to adequate sanitation (World Bank Zambia, 2020). These statistics shows the inadequacies in service delivery that affect public health care and quality of life negatively.

The discussion on service delivery in Zambia is anchored on issues of equity, quality and accessibility. Government initiatives aimed at improving service delivery have shown mixed results. According to (USAID, 2022) on local government performance assessment, most councils assessed were below 10% of service delivery especially in area of waste management.

According to Mwanaumo and Tembo, one of the shortcomings of local authorities in Zambia is the autonomy to collect revenue. This is because local authorities are government structures designed for populations with abilities to pay local taxes for it to be financially viable and sustainable while these taxes may carry specific regulations and conditions from central government on how to collect them (Mwanaumo & Tembo,2023). A local authority is expected to fund itself by raising revenue from local sources such as service charge and levies. It is therefore imperative that revenue collected by local authorities must cover the cost of basic services and effective service delivery. It can therefore, be agreed in this context that revenue is essential as it determines the local authority’s functionality. The effectiveness and efficiency of revenue collection and utilization take a central position in ensuring the success of any local authority in service delivery (Kawana, 2023).

According to (OECD, 2009), Revenue is income earned by the local authority for services rendered. This revenue may include collection from rates, levies and charges. International Financial Reporting Standard (IFRS 15) defines revenue as income arising 0in the course of an entity’s ordinary activities (ZICA, 2019). According to IPSAS 47, revenue is the gross inflow of the economic benefits received and receivable by the entity, which represents an increase in net assets/equity, other than increases relating to contributions from owners (IPSASB, 2023). In the context of this study, revenue can simply be defined as funds collected by local authorities from various sources to support public services and operations. The revenue collected should be accounted for, as guided by the public finance management Act general regulations (GRZ, 2020). In the wake of revenue collection, local authorities are required to plan, develop and implement effective revenue enhancement strategies to maximize their revenue base. This is the effective path local authorities should take in regard to revenue collection; however, it is the opposite case in reality. Local authorities in Zambia find it difficult to maximize their revenue base due to the culture of non-payment for any goods and services perceived to come from government. The other challenges faced by local authorities are political and socio-economic coupled with poor administrative systems and shortage of skills.

Local authorities in Zambia receive funding from central government in form of grants for specific functions. This funding is not sufficient to sustain operations; as a result, local authorities rely on local revenue collection in in form of taxes and charges (Mwanaumo & Tembo, 2023).

According to IMF (2010), most developing countries are still facing a fundamental need to raise more revenue from their own tax bases. In Zambia, the office of the Auditor General has cited local authorities for inadequate revenue collection consecutively in its reports dated 31 December 2021, 31 December 2022 and 31 December 2021. Local revenue plays an essential role in the running of a local authority as it significantly contributes to the funding of both recurrent and development expenditure (Kawana, 2023).

A report by the (UN-HABITAT, 2015) highlighted a decline in local revenue collection by local authorities in most developing countries in Africa over the years which has resulted in over-reliance on the central government funding which distorts the essence of decentralization. Decentralization is a policy introduced by the Zambian government in 2013, to empower local authorities by increasing the autonomy in their revenue collection (GRZ, 2013).

Local revenue generation enables local authorities to fund capital projects and monitoring such as roads, street lighting and buildings.

Although, the government of the republic of Zambia has put more efforts on decentralization, most citizens still face inadequate access to basic services at a local level (USAID, 2022). Given this background, it is imperative to note, local authorities can raise revenue from local sources, which they identify in order to increase their financial base and improve on the quality-of-service delivery and adequately increase access to basic need for citizens at a local level.

Statement of the Problem

The problem under investigation is inefficiency in the collection of revenue in local authorities in Zambia, as in the case of KMC, resulting in poor service delivery. The term efficiency has many different sides or aspects appertained to the collection of revenue. In the context of this study, efficiency pertains to the ability of Local Government Authorities to achieve their revenue collection objectives with optimal resource utilization. According to (Chitembo, 2009), efficient revenue collection involves generating maximum output in yielding the desired financial outcome. Over the years, the efficiency of revenue collection at Kalulushi Municipal Council has been inefficient. The office of the Auditor General has consecutively cited KMC for failure to collect revenue in its reports dated 31 December 2021, amounting to ZMW 1,263,281(Auditor General, 2021), 31 December 2022, amounting to ZMW 14,162,981(Auditor General, 2022). According to LGAZ, 2022, local authorities in Zambia are mandated to deliver services to communities in an efficient manner as enshrined in the local government Act of 2019 and local government service charter. For these activities to be done, financial resources are required. There has been a concern at Kalulushi municipal council as regards to revenue collection. In addition to this, there is great concern and dissatisfaction from resident about the quality of services the local authority is providing.

Pieters, 2015 highlighted that many local authorities in many countries experience poor service delivery as a result of inadequate revenue to fund their budgets. Kalulushi municipal council was among the local authorities cited in the 2023 Auditor General’s report for failure to collect revenue (Auditor General's Report, 2023). Despite the level of autonomy given about revenue at local level, many local authorities in Zambia still fail to effectively and efficiently collect and manage their local revenue.

During the budget review meeting held in the council chamber on Wednesday 24 July 2024 under minute KMC/MGT/181/07/24, it was revealed that KMC failed to efficiently and adequately collect revenue in some areas as per approved budget of 2024. It was further revealed that the inadequacies in revenue collection ultimately affected service provision in some parts of the district.

As is the case with many local authorities in Zambia, Kalulushi municipal council faces revenue collection challenges which has a negative impact on service delivery.

Therefore, this study aims to add to the discourse on municipal resource deficiency and service delivery by assessing the effect of revenue collection on local authority’s service delivery in Zambia.

Research Objectives

To examine the main sources of revenue at KMC.

To assess the efficiency and effectiveness of revenue collection mechanisms used at KMC.

To examine the relationship between revenue collection and the quality-of-service delivery at KMC.

Research Questions

What are the main sources of revenue at KMC?

How effective are the current revenue collection mechanisms used at KMC?

What is the relationship between revenue collection and services delivered by KMC?

Literature Review

This section focuses on the examination of relevant literature related to the objectives and research questions, establishing a basis for understanding the key issues and the context of the study.

Main Sources of Revenue

Richard Sililo conducted a study titled “The Effects of Unitary State on Local Authority Revenue Mobilization in Zambia: A Case Study of Lusaka, Chongwe & Kafue Local Councils. The study was confined to Lusaka city Council, Chongwe Municipal Council and Kafue Town Council. Qualitative approach was used. The sample size was 18nkey informants, 4 from each council, 3 from the ministry of local government, 2 from the ministry of finance and one official from decentralization secretariate. Two informants were purposively selected and semi-structured interviews were used to collect data, which was analyzed through thematic analysis.

The study found that there are two types of revenue sources for local authorities being; traditional and non-traditional. The findings revealed that both of these sources are inadequate to facilitate service provision in local authorities. The findings also revealed that central government controls have hindered effective revenue mobilization in local authorities.

Sililo concluded that government should consider revising the Acts of parliament so as to allow local authorities urgent decisions regarding revenue mobilization without seeking central government approval. Furthermore, Sililo recommended that, the ministry of local government and local authorities should work together in reducing political interference on matters related to local authority’s revenue mobilization (Sililo, R, 2021).

Moffat Tembo conducted research titled “Framework for addressing drawbacks of central government fiscal transfers in Zambia”. The study adopted a mixed approach and data was obtained through purposive and critical case sampling using interviews and questionnaire.

The sample size was 102 computed at 95% confidence level with a 5 % confidence interval.

Data analysis was quantitative and included use of descriptive statistics, analysis of variance and multivariate analysis of variance to examine the relationships between variables.

The key result of interviews was the identification of measures being used to enhance revenue generation. The results allowed conclusions on how to eliminate the dependance and dominance relationships with central government, remove reliance on fiscal transfer (Grants) and induce local authority autonomy to guarantee local performance and sustainability of income generation (Tembo, M, 2020).

Challenges in revenue collection

Tembo and Mwanaumo conducted a study titled “Challenges to internal Local government Revenue Generation”. The aim of the study was to identify and explain the challenges associated with internal revenue generation in Zambian local government system. The findings from the study shows that local authorities in Zambia are unable to generate own revenues since the central government has taken up most revenue streams in the districts and put in place regulations that restrict generation and collection of own revenues. The lesson from this literature is that, due the large sample size of 102 out 116 local authorities in Zambia, the data and findings were representative of 95% of all the local authorities in Zambia, which entails that a lot local authorities Zambia are facing challenges with local revenue collection (Tembo & Mwanaumo, 2022).

Efficiency and Effectiveness of revenue collection Mechanisms

Mchwampaka and Bingireki conducted a study titled “The of Electronic Fiscal Device Management Systems on Revenue Collection: A case of Ilala Municipal Council”. The study adopted a convergent research design with a sample size of 387 respondents selected through simple random and purposive sampling. Data was collection involved self-administered questionnaires and interviews to gather primary data. Quantitative was analyzed by using descriptive and inferential statistics with the help of SPSS 26, while qualitative data was analyzed using content analysis.

The results from the findings indicated a positive correlation coefficient of 0.650 between fiscal Device Management Systems and Revenue Collection. The regression model for Fiscal Device Management Systems as the predictor yielded a coefficient of determination (R Squared) value of 0.523 meaning that the Fiscal Device Management Systems could explain the increase in revenue collection by 52.3% and therefore to optimize the effect of information systems on revenue collection.

The study recommended that, the council should prioritize user engagement and education. The study further highlighted that empowering users with knowledge and training of these systems will increase adoption rates, improve revenue collection and lead to more comprehensive understanding of the effective revenue management strategies (Mchwampaka & Bingireki, 2024).

Mushimbwa produced a dissertation entitled “Examination of strategies of Local Authorities in Zambia: A case of Gwembe District Council”. The study sought to examine existing strategies used by local government authorities. The study used quantitative research method on a population of 46 employees of Gwembe district council by purposively sampling 76 employees to gain insights from key informants involved in designing and executing local revenue collection system. The study identified the inability to mobilize sufficient local revenue by local authorities as results of socioeconomic, infrastructural and institutional constraints. The lesson from this literature is that socioeconomics and infrastructural systems are essential for revenue collection strategies (Mushimbwa, 2019).

Chilambwe and Tembo published a research article that sought to investigate the effectiveness of revenue collection strategies employed by Lusaka City council. The study used mixed research methods, which involved the use of interviews and questionnaires and using survey monk formula of a sample size of 385 individuals and residents in the study area. The findings revealed that online system and bank transfers were the main strategies used by LCC to collect revenue. The findings also revealed that the extent of revenue collection strategies used by LCC was poor (Chilambwe & Tembo, 2023).

Effectiveness of revenue collection strategies

Zidah Mwiinde and Zivanai Mazhambe conducted a study titled An Analysis of revenue management efficiency at Lusaka City Council in Zambia. The study empirically investigated the efficiency of revenue management at Lusaka City Council, the methodology used was a mixed research and primary data was collected through individual questionnaires and in-depth interviews with Lusaka City Council employees. Employing the Survey Monk formula, the sample size comprised 70 council workers selected through purposive and simple random sampling methods. The study revealed that bank deposits were identified as the most effective revenue collection practice at LCC, Further the study highlighted Fraud, Administrative inefficiencies and limited enforcement as challenges faced by Lusaka City Council. Interviewees expressed belief in the appropriateness of existing revenue collection strategies; however, the study found the overall extent of these strategies to be poor. The study recommends a harmonization or review of the legal framework supporting revenue collection to enable Lusaka City Council realize its full potential (Mwiinde & Mazhambe, 2024)

The effect of revenue collection on the quality-of-service delivery

Moffat Tembo and Erastus Mwanaumo conducted research on service delivery in Zambia’s local authorities in their article titled Factors affecting effective infrastructure service delivery in Zambia: A case of Eastern Province. The research adopted a qualitative study design and techniques. The study used case studies in selected local authorities to examine the elements of the service delivery evaluation. Interviews were conducted on 52 council officers from 9 councils in Eastern Province and the response rate was at 90%. Findings from the research revealed some factors influencing local authorities in service provision and highlighted these to be internal and external. These factors include inadequate qualified workers and political and central interference. The study also revealed that most councils used a bigger portion the equalization funds for administrative matters (Tembo & Mwanaumo,2021). Lessons learnt from this literature is that most councils are not able to provide quality services due to numerous factors such as political interference and inadequate funding to carter for both administrative and service delivery.

A number of studies have been conducted on the influence of revenue on the quality-of-service delivery provided by local authorities in Africa. For instance, Kawana published a Master’s dissertation titled “Investigating barriers to revenue collection affecting municipal service delivery; A case study of Katima Mulilo Town council”. The main objective of the study was to investigate barriers to revenue collection affecting municipal service delivery. The findings from the study, indicate that the cause of inadequate revenue collection by the council were but not limited to, poverty and unemployment, political interference, and customer attitude towards payment of services (Kawana,2023). Major lessons from this literature are that political interference, poverty and unemployment can have a negative effect on the collection of own revenue by local authorities. Further, lack of customer sensitization on the importance of paying for the services offered by the local authority pose a huge challenge on local authority’s revenue collection and have a negative impact on the financial performance of the local authorities.

Nyikadzino and Nhema (2015) conducted a study entitled ‘the implications of center-local Relations on service Delivery in local Authorities in Zimbabwe: The Case of Chitungwiza. The aim of the study was to assess the implications of service delivery in Chitungwiza municipality. The findings of the study revealed that the parent ministry retains overall powers and control over the municipality. Lesson from this literature, is that local authorities in Africa such as Zimbabwe and Zambia may experience similar circumstances of municipality operating directly under the directives of the ministry, hence depriving the residents the power to choose services they need the municipality to provide them.

Chishimba and Nsenduka (2021) in their study entitled ‘an analysis of the effects of equalization Funds on service delivery in selected local authorities in Zambia analyzed how equalization funds affect service delivery. The targeted local authorities were Lusaka city council, mansa municipal council, and Chisamba and Luangwa town councils in Zambia. Findings from the study shows that there was lack of satisfactory adherence to the guidelines on the utilization of equalization funds for service delivery as guided by the central government. The local authorities studied did not adhere to the prescribed guidelines on the utilization of equalization funds. Lessons from this literature is that some local authorities in Zambia use only a small proportion of equalization funds for service delivery, depriving the community of their much-needed public services.

Theoretical and Conceptual Framework

A theory is a group of logical, related statements that is presented as an explanation of a phenomenon (Welman, Kruger & Mitchell, 2005). Theories assist us in organizing our environment, in making sense of it, guiding us on how to behave in it and predicting what might happen next (Henning, et al., 2013). The study was anchored on the following theories;

Public Finance Theory

From a municipal perspective, the study leaned on economic sustainability within the theory of public finance. Musgrave postulated public finance theory in 1969. Musgrave suggested that public finance ought to be used as a tool for achieving given monetary and social targets. This is related to strategies that give rise to increased revenue collection and later improve service delivery to the citizens. The strategies may include increased tax coverage and maximized collection. According to (Musgrave, 1969), the essential objective of revenue collection is to raise income, which is used as a conduit in accomplishing certain social objectives by state owned enterprises such as local authorities. Given this background, this study, therefore, sets that a local authority should form its revenue base with suitable revenue structure with some sort of revenue collection strategies and enhancement. According to (Shaoul, 2010), this development can improve the income dependability through a well-coordinated tax structure. The well-established tax structure in the public finance theory is related to the revenue collection strategies and enhancements that include various aspects such as increase tax coverage and maximized collection that help in increasing revenue collection that improves service delivery to the citizens.

Stakeholder and Expectation Theories

The study also leaned on stakeholder Theory. This theory suggests that the aim of a business is to create as much worth as possible for interested parties. This implies that for success and sustainability over time, managers must keep the interest of those with organizational alignment i.e., interested parties, and heading in the same direction. (Freeman, et al., 2010) asserts that a stakeholder is a group or an individual that affects or can be affected by an organization. Stakeholders can come from within the business or from outside the business. Such stakeholders include employees, suppliers, shareholders, government, customers, non-profit groups and the local community.

The council as an organization therefore, have numerous stakeholders whose interest they seek to meet. As key stakeholders in the service provision, the community members are therefore, do and should interact with the Council. From the community’s perspective, this study investigated the expectation theory.

In 1977 and 1980, Oliver proposed the expectation theory, which is now the most widely accepted theory concerning customer satisfaction processes. The theory holds that satisfaction/dissatisfaction results from a customer's comparison of performance of a product or service with predetermined standards of performance. According to Oliver, the predetermined standards are the customer's predictive expectations. Three possible outcomes of the comparison are possible. Positive dis-confirmation occurs when performance is perceived to be better than the predetermined expectations. In this scenario, a customer is delighted. Zero dis-confirmation occurs when performance is perceived to be exactly equal to expectations, and customers are likely to be satisfied. Finally, negative dis-confirmation occurs when performance is lower than expectations. Of course, negative dis-confirmation leads to dissatisfied or unhappy customers. These dissatisfied clients i.e., tax payers, may feel not obliged to pay local taxes.

Figure 1: Conceptual Model of Study

Source: Researcher’s own illustration

Research Methodology

This study adopted a pragmatic research philosophy, integrating both qualitative and quantitative research methods to provide practical insights into the effect of revenue collection on service delivery. The pragmatic approach allowed for a flexible combination of structured surveys and financial data, enabling the study to explore both empirical relationships and the underlying challenges local authorities faced in revenue collection. By combining deductive reasoning through regression and correlation analysis and qualitative insights from in-depth interviews, the study offered a comprehensive understanding of revenue collection and their impact on service delivery in local authorities in Zambia.

The research design adopted for the study was sequential explanatory, providing an efficient means of examining the relationship between revenue collection and service delivery. This design was appropriate as it allowed the researcher to collect quantitative data first and later qualitative data allowing the researcher to uncover the rationale behind the quantitative findings.

The study was conducted in Kalulushi district as it is peri-urban allowing the research to cater for both urban and rural local authorities. Local authorities in Zambia face unique challenges, including revenue collection and service provision.

For the sample, a total of 100 local taxpayers were selected using slovin formula, ensuring statistical reliability with a 95% confidence level and a 5% margin of error. Additionally, a purposive sample of 30 key informants was chosen to provide qualitative insights into the challenges KMC faced in collecting revenue. Simple random sampling was used to ensure proportional representation from various tax payers, such as business owners, property owners and mining companies.

Data was collected using a structured questionnaire, pre-tested on a small sample to ensure clarity and validity. The data collection procedure involved distributing questionnaires and following up with respondents to maximize the response rate. Regression and Correlation analysis, supported by descriptive statistics, was employed to model the relationships between revenue collection and service delivery. This method provided empirical evidence of the effect of revenue on the provision of services such as streetlighing, road maintainace and waste management.

Finally, the study followed ethical standards for research conduct. Informed consent was obtained from all participants, who were fully informed about the purpose of the study, their right to anonymity, and the voluntary nature of their participation. Participants were assured that their responses would remain confidential and would only be used for academic purposes. Ethical approval was granted by the University of Zambia's institutional review board to ensure the study complied with ethical guidelines (Bryman, 2016). Additionally, all data collected were securely stored in password-protected files and accessed only by the research team to maintain confidentiality and safeguard participant information. To further uphold ethical integrity, the researcher ensured that no participant was subjected to psychological, emotional, or professional harm throughout the research process.

Results and Discussion

Demographic Characteristics

The pie chart in figure 1 below illustrates the respondent’s gender. 53% of the respondents were male, while 47% of the respondents were female. Based on these results, the study had a nearly balanced gender of the respondents. With nearly equal representation of males and females, the findings reflect a more comprehensive understanding of how both genders interact with the local authority and how they perceive the revenue collection processes and service delivery. The inclusion of both genders ensured that the research considers different viewpoints, preferences, and challenges faced by male and female stakeholders, allowing for more inclusive policy recommendations and improvements in service delivery.

Figure 2: Respondents Gender

Source: Author, 2025

Figure 3 below illustrates the respondent’s age. 10% of participants aged 18-30, 77% between 31-50, and 13% above 50, the findings provided a clear picture of how each group influences revenue generation and the reception of services. Younger individuals (18-30 years) brought a fresh perspective on modern and emerging needs for public services. The middle-aged group (31-50 years) represented the most active economic participants and therefore, provided insights into the greatest contributors to revenue. Older participants (above 50 years) offered valuable insights based on experience, particularly on the sustainability of current service delivery models and potential adjustments for future demographic trends.

Figure 3: Respondents Age group

Source: Author, 2025

Revenue collection

Main sources of revenue at KMC

The findings as shown in table 5 below revealed that the main sources of revenue at KMC are Mining Firms which constitute (56%) of the collection per annum, Commercial Rates constituting (18%) of total collection per annum, Levies, Fees & Charges (14%), Residential Properties (2%), and GRZ Grants in form of equalization fund (10%).

Table 1: Sources of Revenue

Source: Kalulushi Municipal Council

Efficiency and effectiveness of revenue collection Mechanisms.

Table 2 below illustrates respondent’s perception about the efficiency of revenue collection by Kalulushi Municipal Council. The findings show that 27% of the respondents perceived the mechanisms to be efficient, 14% of the respondents remained neutral, and 51% perceived the collection mechanisms to be inefficient.

Table 2: Respondent’s views on the efficiency of revenue collection mechanisms at KMC.

Source: Author, 2025

The results in table 3 below indicated that revenue collection mechanism at KMC was predominantly manual with limited use of digital payment and partial development of mobile money system. Furthermore, the study revealed that field inspection and physical enforcement was not done on a regular basis and payments and banking are done physically with partner banks. Further table 4 below indicated that the collection was inefficient with residential and commercial standing at 2.2 and 2.86 percent respectively for the ended 2021. Mining and fees and charges stood at 10.54 and 14 percent respectively in financial year ended December 2022

Table 3: Revenue Collection Mechanisms used by KMC

Source: Author, 2025

Table 4: Revenue Collection efficiency

Source: Kalulushi Municipal Council

Table 5 below shows the decrease in revenue collection at KMC. Kalulushi Municipal Council collected revenue of its projected collection on residential and industrial/commercial rates for 2023 68.65% less as compared to 2022. The council also recorded low collection performance in 2021 and 2022 with rating ranging between 2.20% and 14% being lowest and highest respectively. Manual systems and inadequate IT infrastructure contribute to inefficiencies. Comparing this to best practices suggested by financial management Act-general regulations (2020) section 29 (2) (a) (b), KMC could benefit from digital tax collection platforms and citizen awareness campaigns to improve compliance.

Table 5: Decrease in revenue collection

Service delivery

Satisfactory of service delivery at KMC.

Table 6 below shows respondents satisfaction with the quality of various services, such as waste managements, road maintainace and street lighting. A Likert scale from 1 (very satisfied) to 5 (dissatisfied) was used for the rating. The results show that waste management got a mean of 2.99 and standard deviation of 1.345 indicating that respondents were less satisfied with the services and had more differing opinions in this regard. Road management got a mean of 3.27 and a standard deviation of 1.053 indicating that respondents were more neutral and somewhat satisfied and moderately variated. Street lighting got the highest mean of 4.29 and a standard deviation of 1.057 indicating that respondents were highly satisfied with the services and variability in opinions but not too extreme in this regard.

Table 6: Respondents satisfaction with local authority’s service delivery

Correlation Analysis

Relationship between revenue collection and service delivery.

To determine whether there was a significant relationship between revenue collection and service delivery, a Pearson correlation analysis was conducted. The results in table 7 below shows a correlation of 0.874, which indicates a highly positive relationship between revenue collection and service delivery. This finding conforms with the research by Kawana (2023) who found that a relationship exists between revenue collection and service delivery in her study titled Investigating barriers to revenue collection affecting municipal service delivery: A case study of Katima Mulilo Town Council.

Table 7: Correlation Analysis- Revenue and Service delivery

Source: Author, 2025

Multiple regression analysis

Model Summary

The researcher used correlation examination with the point of evaluating the predictive value of the study variables. According to table 8 below, the study shows a linear regression correlation R of 0.759, which shows that there was, indeed, a statistically strong relationship between the independent variables and the dependent variable. The R square, which is represented by the coefficient of determination of 0.576, shows that revenue collection is equal to 57.6% of the variation as far as the dependent variable is concerned. The remaining 42.4% in the variation in the independent variable was a reflection of other factors, which are not represented in this model.

Table 8: Model summary

a. Predictors: (Constant), Revenue from local sources, Number of revenue collection points, Total revenue collected.

ANOVA

According to table 9 below, the p value of the ANOVA stood at 0.000 (0.00%), which, by all means was below 0.05 (5%) level of significance, it was concluded that the regression model could be said to be a good fit for data, which justified undertaking the regression analysis.

Table 9: ANOVA

b. Predictors: (Constant), Revenue from local sources, Number of revenue collection points, Total revenue collected.

Source: Author, 2025

Regression coefficients

Table 10 below indicates that the regression coefficient of constant 0.996 and 0.001 represents the estimated level of service delivery when all independent variables are zero. The value (p< 0.001) is statistically significant, suggesting the baseline of service delivery is not zero. The regression coefficient of 0.229, 0.166 and 0.363 for revenue from local sources, number of revenue collection points and total revenue collected would lead to 0.229, 0.166 and 0.363 increase in service delivery.

Table 10: regression coefficients

Qualitative Analysis

Thematic Analysis

The qualitative data collected through expert interviews and focus group discussions provided deeper insights into the sources of local revenue and challenges, mechanisms and strategies related to revenue collection and its effect on service delivery. A total number of ten in depth interviews and one focus group discussions conducted with local authority staff, business owners, and residents. This presented in terms of the research questions, which include, the sources of local revenue, mechanisms and strategies related to revenue collection and its effect on service delivery at KMC. Based on the findings of this study, the results obtained were as illustrated in the following themes below:

Selected Themes for qualitative information – Inductive Approach

The selected themes address, objective one, two and three. Objective one and two aimed at examining the main sources of revenue at KMC and efficiency and effectiveness of collection mechanisms. Objective three was intended to examine the relationship between revenue collection and service delivery at KMC. The selected themes also address the challenges faced at KMC in its revenue collection and the effectiveness of revenue collection strategies employed.

Theme 1: Sources of revenue for the council

The first theme to emerge was the sources of revenue for the council.

The aim of this theme was to establish the sources of revenue for KMC as tabulated in table 8 above in order to identify whether they are sufficient to support the delivery of public services, sustainable in a long term and efficiently managed or underutilized. Overall, this allowed the researcher to assess how the availability and nature of revenue sources affect the council’s ability to fulfill its service delivery mandate.

A question about the sources of council revenue was asked and the respondent highlighted that the sources are in categories, which include, mining rates, commercial rates, residential rates, business levies, charges, and fees. The respondent further highlighted that the council collects about 56% of its revenue from the mines, 18% from commercial rates, 14% from business levies, fees and charges, 2% from residential rates citing low levels of tax- payer compliance and participation as cause of the percentage, and 10% from government grants.

“The major contributor to the revenue of the council is mining firms which account for 56% followed by commercial businesses which account for about 18%. Business levies, fees and charges account for 14%, 10% is accounted for government funding in form of grants and residential rates account for 2%, the lowest, due to low levels taxpayer compliance and participation”.

Theme 2: Challenges in Revenue collection

The second theme to emerge was the sources of revenue for the council.

The aim of this theme was to

A theme that emerged from the interviews was the challenges faced in revenue collection divided into sub-themes:

Non-compliance by local taxpayers.

The respondent expressed concerns with the attitude of local taxpayers especially from residents and business community. Most local taxpayers deliberately evade paying local taxes as they complain that the tax, they pay to the council do not result to their expectations.

“Most local tax-payers shun away from paying local taxes because they feel the council’s service delivery does not commensurate to the amounts they pay”.

Inadequate IT infrastructure

The respondent highlighted another challenge faced in revenue collection as lack of adequate Information Technology Infrastructure. The council does not have modern payment system such as point of sale instead it is currently using old payment system where tax-payers pay through the cashier or the bank which is cumbersome and inconveniencing to some clients.

“Clients are forced to pay through the bank or at cashier’s office, which is frustrating to some. This development reduces the number of clients paying due to the ambiguity of the process”.

Logistical challenges

The respondent highlighted that transport is another challenge faced by the council in revenue collection. The council normally do community sensitization on the importance of paying local taxes. This exercise supposed be done on a monthly basis, however, it is done on a quarterly basis. On the other hand, council staff under revenue section normally delivers invoices to business owners on a regular basis which is also a challenge due to lack of transport.

“Most are the time when we delay in distributing invoices to clients and reduce on the number of community sensitizations due to lack of transport challenges”.

Theme 3: Efficiency and effectiveness of revenue collection mechanisms.

The third theme to emerge was the efficiency and effectiveness of revenue collection mechanisms. The theme identified gaps and weaknesses in revenue collection mechanisms. These gaps and weaknesses included lack of use of digital billing and receipting system, use of cash and cheque payments through cashiers and the bank, non-use of mobile money payment system, non-regular of physical enforcements and inefficiency revenue collection of residential, commercial and industrial rates.

“As a council we are still using manual system for billing and issuing receipts to clients and we have not yet gone cashless. Hard cash is being received and payments are done by cheques with partial use electronic fund transfers. Furthermore, physical enforcements on tax compliance are not done regularly resulting in inefficiency collection of revenue from residential, commercial and industrial rates”.

Theme 4: Effectiveness of revenue collection strategies employed.

The fourth theme to emerge was the effectiveness of revenue collection strategies employed by KMC.

The aim of this theme was to identify the gaps and weaknesses such as leakages, poor compliance, and outdated systems and recommend for improved revenue mobilization strategies, better budget planning, allocation, and overall better service delivery.

A theme that emerged from the interviews was the revenue collection strategies divided into two sub-themes:

Intensified community sensitization

The respondent highlighted that one of the revenue collection strategies employed by the councils was intensive community sensitization. The council informs and educates the community about the importance of paying local taxes to the council.

“We normally do community sensitization on a quarterly basis, and it is observed that after each sensitization revenue collection increases by some margin as compared to previous ones before sensitization. This development in my view suggest that the strategy is effective”.

Promotions and payment plans

Both the qualitative interviews and survey data revealed that the council offered a discount of 50% on its client’s outstanding balances, given that they pay the remaining 50% within a specified period. The respondent highlighted that the institution also offers payment plans allowing clients to pay their balances in installments.

“As a council we offer 50% discounts on clients’ outstanding balances given that they pay the remaining balance within a specified time frame, and we also offer payment plans to clients in some cases. During the promotion, many clients flood the civic Centre to pay their dues and there is normally an increase in revenue collection because of the increase in compliance levels. In my view, this demonstrates effectiveness in the collection strategy”.

Theme 5: Relationship between revenue collection and service delivery

The firth theme to emerge was the relationship between revenue collection and service delivery at KMC. The aim of this theme was to examine whether there is a direct correlation and perception and compliance feedback loop as higher and more efficient revenue collection leads to improved service delivery, which will increase tax compliance from taxpayers.

Theme 6: Perception of service Quality

Another theme from the interviews was the perception of service quality. It was also noted that the public’s trust in the local authority’s services had been eroded due to inconsistent service delivery. Both interviews and survey data revealed that a lot of participants were not happy with the quality of services offered by the council in relation to the money collected from the public i.e., tax payers. Frequency distribution of service delivery and satisfaction with local authority’s service delivery both support this theme and one of the respondents from the focus group discussion highlighted the reason why tax-payers are hesitant to comply with local tax payments,

“We find it unnecessary to pay local taxes because the quality of services offered by the council are very poor, I feel the services offered by the council does not resonate with the money we pay. As business owners and marketeers, we feel that we pay a lot of money and the council does not offer services to the required standards”.

Conclusion and Recommendations

Conclusion

The main objective of local authorities in Zambia is to provide quality services to communities within their jurisdictions. Local authorities’ functions are enshrined in the local government act section 16(2) of 2019. The act provides guidance on the functions and services that local authorities should provide. These services include water and sanitation, waste management, infrastructure maintainace, road maintainace, market and bus station management, provision of recreation facilities and land management.

In order to achieve its objective of quality service delivery, local authorities need financial resources. In 2014, the government of the republic of Zambia introduced the decentrization policy in order to help local authorities to be efficient in its operations and increase it autonomy in revenue collection. Despite this intervention by the central government, most local authorities still find it difficult to effectively collect revenue and as a result fail to effectively deliver services to the communities.

It is against this background that the study sought to assess the effect of revenue collection on local authority’s service delivery, a case of KMC. To achieve the research objectives, a survey and interviews were conducted among local taxpayers, civic leaders and experts. The study had a sample size of 100 randomly selected local taxpayers and 30 purposively selected individuals. The study used descriptive statistics and thematic data analysis. Data was analyzed by obtaining frequencies, percentiles, and means. The study also employed Pearson correlation and Regression analysis to assess the effect of revenue collection on service delivery by way of examining the relationship between revenue collection and service delivery. From the findings, the quality-of-service delivery by the council is poor especially in the area of waste management and road maintainace and revenue collection is not very efficient but moderate. The findings also revealed that the council faced challenges of non-compliance from taxpayers, which lead to decrease in revenue collection and in turn lead to poor service delivery. The findings as shown in table 4.7 indicates that a number of respondents were not satisfied with waste management and road maintainace with mean values of 2.99 and 3.27 for waste management and road maintainace respectively. This confirms that there is a correlation between revenue collection and service delivery.

The study assessed the impact locally generated funds have on the provision of services by local authorities in Zambia, such as waste management, road maintainace and streetlighing etc. The study found that revenue collection has a high positive effect on service delivery, with a correlation coefficient of 0.874, statistically significant at 0.01 p-value. Regression correlation R= 0.759 indicate statistically strong relationship between independent and dependent variables i.e. Revenue collection and Service delivery variables. The study therefore, achieved all the objectives and gave the following recommendations.

Recommendations

1. Sources of revenue and challenges in revenue collection.

Revenue is heavily concentrated in mining (56%) with minimal diversification. The council should establish more revenue sources in order to reduce over reliance on one revenue source. The council should undertake regular stakeholder sanitizations on the importance of paying tax in order to increase awareness and encourage the sense of ownership among taxpayers. The local authority should embark on upgrading its IT Infrastructure in order to encourage paperless billing and cashless payments. More vehicles should be purchased in order to overcome logistical challenges faced under revenue section during enforcements.

2. Efficiency and effectiveness of revenue collection mechanism and collection strategies.

The council should improve on the efficiency and effectiveness of revenue collection mechanisms in order to maximize its revenue base. Revenue collection should efficiently and effectively be done from all its identified revenue sources and points. The council should consider implementing mobile payment system as a short-term measure, use modernized payment systems such as the intelligent Point of Sale (iPOS) system, upgrade and improve its IT Infrastructure as medium term measure. The council should also continue with its current revenue collection strategies and work on improvements and furthermore, introduce more of such strategies in order to encourage high levels of compliance from local taxpayers.

Relationship between revenue collection the quality-of-service delivery

The findings of this study reveal a strong positive correlation (r = 0.874) and a substantial regression relationship (R = 0.759) between revenue collection and the quality-of-service delivery at Kalulushi Municipal Council. This indicates that improvements in revenue collection are likely to lead to corresponding enhancements in the delivery of services. However, despite this statistically significant relationship, taxpayers’ perceptions highlight dissatisfaction with the quality of key public services such as street lighting, road maintenance, and waste management.

Based on these results, it is recommended that KMC adopts a multifaceted strategy aimed at strengthening both revenue collection and service delivery efficiency. The local authority should consider the following: -

Enhance Revenue Collection Systems.

The Council should modernize its revenue collection mechanisms by integrating digital platforms, automating billing and payment systems, and improving record-keeping. This will help reduce leakages, increase transparency, and build public confidence in the local authority’s financial management.

Strengthen Accountability and Transparency.

Establish clear frameworks for tracking how collected revenues are allocated and utilized, such as regular publication of financial and performance reports which may enhance public trust and promote voluntary compliance among taxpayers.

Prioritize Service Delivery Improvements.

Immediate attention should be given to visibly improving services that directly affect public welfare—particularly street lighting, road maintenance, and waste management. Immediate attention in these sectors can significantly change taxpayer perceptions and demonstrate the tangible impact of improved revenue collection.

Engage and Sensitize the Community

Continuous stakeholder engagement is crucial. The Council should implement taxpayer sensitization programs to highlight how revenues are used and to encourage a sense of ownership and partnership in local development.

Capacity Building and Resource Allocation

Investing in staff training on financial management, revenue mobilization, and service delivery planning will enhance institutional capacity and operational efficiency at KMC.

Recommendation for future studies

Future studies could be conducted on how digitalization affects revenue collection and ultimately service delivery in local authorities in Zambia. Another line of research could be exploring the impact of digital transformation on fiscal autonomy in local authorities.

Declaration of Competing Interests

The authors declare that they are not aware of any competing financial interests or personal relationships that may have influenced the work described in this document.

Funding

This research did not receive specific grants from any public, commercial, or non-profit sector funding bodies.

Acknowledgements

I would like to offer my heartfelt gratitude to everyone who made a contribution to this research

Ethical considerations

The article followed all ethical standards appropriate for this kind of research.

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