The Influence Of Ethics And Financial Control Measures On Financial Performance In Four Selected Local Government Authorities In Tanzania

EXTENDED ABSTRACT

In spite of numerous initiatives having been taken by the government of Tanzania to see to it that the public servants utilize public resources prudently, misuse of resources in Tanzanian Local Government Authorities (LGAs) is still out of control, which affects LGAs' financial performance. Therefore, the study on which this thesis is based was set to evaluate influence of ethics and financial control measures on financial performance in terms of using public resources efficiently, effectively and economically. In arriving at that, the study sought to: (i) determine the level of adherence to the national code of ethics and conduct for public service among public service employees, (ii) analyse some existing factors supporting Tanzanian LGAs employees to adhere to the national code of ethics and conduct for public service, (iii) analyze relationship between views on national code of ethics and conduct for public service and views on financial ethical issues, (iv) determine the influence of ethics on financial performance and (v) analyse relationships between financial control measures and financial performance. A cross-sectional study was carried out in Shinyanga Municipal Council, Korogwe Town Council, Monduli District Council and Siha District Council where data were collected from 400 respondents in May and June 2016 through structured interviews using a questionnaire. Moreover, 12 key informant interviews and 12 focus group discussions were held using a checklist of items for discussion and an FGD guide respectively. Statistical Package for the Social Science (SPSS) Version 16.0 statistical software was used to analyse quantitative data while the qualitative data were analysed using content analysis. The results showed that the level of adherence to the national code of ethics and conduct for public service among public service employees in both urban and rural councils was high, although in some areas rural LGAs were doing a bit better than urban councils. It was also found that there was high level of factors supporting adherence to the code, although in some areas urban LGAs were doing a bit better than rural LGAs. As such, while correlations between the code and iii factors supporting its level of adherence (individual values and working environment) in rural LGAs indicated positive association with the code (p < 0.01), in urban LGAs correlation was not significant (p > 0.05). With regard to the relationship between employees' views on the national code of ethics and conduct for public service and views on financial ethical issues, the results indicated high level of financial ethical issues in both rural and urban LGAs, although rural LGAs were doing a bit better on some indicators of financial ethical issues. Again, while in rural LGAs financial ethical issues indicated high positive association with the code (integrity, p < 0.001, accountability, p < 0.01, transparency, p < 0.001 and trust, p < 0.01), in urban LGAs the correlation was not significant (p > 0.05). Results on the influence of ethics on financial performance in terms of efficiency, effectiveness and economy results showed that there was moderate level of financial performance in both rural and urban councils, although rural councils were doing a bit better than urban councils. Ordinal logistic regression showed that transparency as a measure of ethics had positive and significant influence (β = + 0.491, < 0.05) on financial performance. On the subject of relationship between financial control measures and financial performance in terms of efficiency, effectiveness and economy; results confirmed presence of moderate level of financial control measures in both urban and rural LGAs, although rural LGAs were doing a bit better than urban LGAs. There was also a significant positive relationship between financial control measures and financial performance (control environment, information communication and monitoring) whereby in urban LGAs r = 0.376 (p < 0.001), r = 0.146 (p < 0.01), and r = 0.400 (p < 0.001 respectively), while in rural LGAs r = 0.138 (p < 0.1), r = 0.162 (p < 0.1), r = 0.266 (p < 0.001) respectively. Based on the above findings, it is concluded that disparities in some aspects of adherence to the national code of ethics and conduct for public service between rural and urban LGAs are due to diversified mechanisms taken by each LGA to institute to its employees measures for adherence to the code. Disparities in some areas of factors iv supporting level of adherence to the national code of ethics and conduct for public service is also due to differences that exist in employees' background factors influenced by their own values, working culture and working environment. Good relationship between employees' views on the national code of ethics and conduct for public service and views on financial ethical issues between rural and urban LGAs is partly attributed to fear to be dismissed or to be taken accountable by supervisory institutions. Moderate influence of ethics on financial performance in rural LGAs than in urban LGAs is partly attributed to efforts made by rural LGA leaders to enforce their workers to adhere to the principles of financial performance. Powerful mechanisms available in rural LGAs that institute adherence to the financial control measures lead to better financial performance in rural LGAs than in urban LGAs. On the basis of those conclusions, the Ministry of Regional Administration and Local Government is urged to monitor, oversee and emphasize on training, specifically training related to adherence to the national code of ethics and conduct for public service. Moreover, the Ministry of Regional Administration and Local Government is urged to nurture employees' background factors to conform to standards of ethical behaviour in public service. Each LGA, through its own disciplinary committee, is urged to strengthen reward and punishment mechanisms against unethical behaviour. Public service employees should take proactive measures by considering ethics during their operations. The Ministry of Regional Administration and Local Government is urged to assess internal financial control measures of their LGAs financial performance