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Author
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Nyagondo, Olga.R
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Title
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An Investigation of the Impact of Macro-Economic Factors on Revenue Collection in City Councils of Zimbabwe. A Case of Chitungwiza City Council
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Abstract
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The City Councils in Zimbabwe are encountering difficulties in achieving their revenue targets,
highlighting potential concerns with their present revenue collection methods and the impact
of macroeconomic factors on their revenue collection. Given that city councils play a
significant role in providing essential public services, like water supply, this study aims to
explore the influence of macroeconomic factors on revenue collection of city councils in
Zimbabwe, with a focus on the Chitungwiza city council. The primary objectives of the
research were to investigate whether macro-economic factors have a short-term and long-term
relationship with revenue collection and to review pertinent literature on revenue collection by
city councils, including the challenges they face in Zimbabwe and strategies for increasing
revenue. Interest rates, inflation, and exchange rates were used to examine their short-run and
long-run impact on revenue collection, as they are among the macro-economic factors that
influence revenue collection. Secondary sources, including Chitungwiza council's financial
records, ZIMSTATS publications, and the Reserve Bank of Zimbabwe's website, were used to
collect data on these factors through quantitative research. The ARDL approach of Pesaran
(2001) was employed in the data analysis using Eviews 12 software. The data revealed a longrun and short-run relationship between interest rates, inflation, and exchange rates and revenue
collection of Chitungwiza town council, with no short-run Granger causality between the
investigated variables. Interest rates had a positive short-run relationship with revenue
collection, while inflation and exchange rates had a negative short-term relationship. Therefore,
the ECM answered the first objective. The f-bound test established the long-run impact, with
interest rates having a negative long-run relationship, and inflation and exchange rates showing
positive long-term relationships with revenue collection. The second objective was addressed
by this test. The study found that exchange rates, interest rates, and inflation were all relevant
macro-economic factors affecting revenue collection in the Chitungwiza town council. As a
result, the researcher recommended that fiscal and monetary policies be enhanced, revenue
sources diversified, revenue collection systems strengthened, and public awareness increased.
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Date
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2023
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Publisher
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BUSE
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Keywords
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Macro-Economic Factors
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Supervisor
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Dr. Mapuwei
