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close this bookFinancing Cities for Sustainable Development (HABITAT - UNDESA, 67 p.)
View the document(introduction...)
View the documentAbbreviations
View the documentForeword
View the document1. Introduction
View the document2. Main Sources of Municipal Revenue
View the document3. Property Tax
View the document4. Income Tax
View the document5. Charging for Urban Services
View the document6. Tax on Provision of Goods and Services (Business Licences and Fees)
View the document7. Income-Generating Enterprises
View the document8. Borrowing
View the document9. Central Government Allocations
View the document10. Summary of Main Findings, Conclusions and Recommendations
View the documentReferences

5. Charging for Urban Services

Kenya

The charges payable for urban services in urban Kenya are in two forms. The first is a general charge, which is more of a tax, paid to local authorities regardless of whether the resident uses the service immediately or what proportion of available services he/she utilizes. The service charge represents this form of tax in both Nairobi and Mombasa. It is, however, graduated to reflect income earning levels. All the other charges are linked directly to service consumption, and sometimes to the extent of consumption. In the latter category are sanitation charges, refuse removal charges, education fees, and cost-sharing charges in health. There are also some charges in housing development (such as site and service schemes, and plot sales) which are more of betterment tax charges. They are ad hoc in nature and they are only levied at specific stages during the implementation of projects.

From the mid-1980s, privatization and cost-sharing were widely considered in the delivery of services, both by the central government and at local government level. In Nairobi, privatization has been introduced in order to cope with the mounting problem of solid waste management, while Mombasa has yet to take significant steps in this direction.

In the health sector, revenue generation has risen due to the introduction of cost-sharing measures. In the education sector, the contribution of parents to the physical development of schools, as well as towards facilities, is not reflected in the council budgets. In Mombasa, private or community involvement has been introduced in water supply (bore holes).

The service charge

The service charge was introduced as a result of the pressure local authorities were facing following the withdrawal of graduated personal tax (GPT) in the late 1970s and grants in 1982/83, but also as a result of loss of revenue following abolition of school fees. Other factors included the introduction of school milk in primary schools in 1979 and, also, increases in teacher's salaries (these were, however, taken over by the central government in 1985/86).

The Local Authority Service Charge Act, Cap. 274 of the laws of Kenya, empowers local authorities to charge all persons resident in their area of jurisdiction if they derive income from employment in the area or are paid their incomes in the authority (in case income accrues from more than one authority). The service charge is paid monthly and is deducted by the employer. Other persons receiving income that is not derived from employment are, by law, required to obtain a service charge card from the local authority in the jurisdiction they live and to affix service charge stamps of the value of service charge payable each month. Charge rates range from Ksh. 40 to Ksh. 200 per employee each month. The rates are as provided by the Ministry of Finance by Gazette Notice from time to time.

On average, service charge income accounts for 5 per cent of Nairobi City Council's monthly revenue from services. Amounts collected from the service charge have been used mainly to meet the Council's capital expenditure, e.g. purchase of vehicles, construction of schools, roads and social facilities and meeting annual budget shortfalls. The collection costs have been growing over the years (an average of 9 per cent in 1995-96). The Council does not have sufficient administrative capacity to follow-up defaulters. And even when caught the legal process is long and cumbersome. Table 8 shows the trend in service charge income in the last five years and the cost of collection during the same period in Nairobi. For Mombasa Municipality, service charge is a major source of income, surpassed only by rates as the principal source of revenue.

Table 8. Service charge income and collection costs, Nairobi City Council

Period

Income
KPounds '000 p.a.*

Collection Cost
KPounds '000

Collection as per cent of Income Collected

1991/92

11,594

923

8

1992/93

11,943

930

8

1993/94

12,583

1,125

9

1994/95

15,400

1,303

9

1995/96

18,027

1,777

10

Source: Nairobi City Council - Abstracts of Accounts.

* Include interest earned on late payments.

The difficulties associated with the collection of the service charge were recognised by the Finance Minister during the 1997/1998 Budget Speech. Current plans are to abolish the charge by January 1999 and, as part of the government's programme of revenue sharing, to replace it by tax-sharing.

Water and sanitation

The Water and Sewerage Department of Nairobi City Council oversees all water and sewage activities within the city, i.e. undertakes installations, billing and collection of charges. Piped domestic and industrial water supply in Nairobi is billed on the basis of metered consumption rate in developed areas and sale by public water points in undeveloped areas. However, the billing system, which is generally behind, has faced a lot of problems and, as a result, not all who receive the service actually pay for it. The continuous increase in population, especially in the unplanned high-density residential areas, has also exerted pressure on the limited water and sewage network.

Table 9. Water supply revenue account, Nairobi City Council (KPounds '000)

Period

Surplus or (deficit) Carried Forward

1980

4,988

1981

4,371

1982

4,629

1983

5,064

1984

2,872

1986/87

5,412

1987/88

(538)

1988/89

4,551

1990/91

(203)

1991/92

3,121

1992/93

(17,508)*

1993/94

29,642

1994/95

(53,388)*

Source: Nairobi City Council - Abstracts of Accounts 1980 - 1995/96.

* In 1992/93 major losses were incurred due to a major devaluation of the Kenya Shilling. The trend was reversed in 1993/94.

Table 9 shows that Nairobi City Council made surplus funds from operations between 1980-1991/92 and thereafter started incurring loses due to heavy loan repayments. However, these deficits could easily be covered if the Council made serious effort to collect the huge balances of unpaid charges that are shown in Table 10. The balances are net after debt charges.

Mombasa is not a water undertaker. All water supply consumed in Mombasa comes from outside the district, that is from Mzima (Taita-Taveta), Merere (Kwale), Sabaki (Kilifi) and Tiwi boreholes (Kwale). A few boreholes have recently been developed by institutions, hotels, private homes and women's groups. The council, however, collects some substantial amount from trade effluent removal charges, emptying of cesspits and sceptic tanks. Money paid through water bills (i.e. charge is piggy-backed) is collected by the National Water and Pipeline Corporation, and then passed on to the Municipality. The existence of large numbers of cesspits, septic and pit latrines means that people in these areas do not pay sanitation charges. The municipality also makes direct charges for drainage sanitation connections. Monthly charges for areas covered range from Ksh. 7.00 per bill to Ksh. 20.00 per bill.

Table 10. Outstanding amounts on water account, Nairobi City Council (KPounds '000 p.a.)

Period

Total Due

1991/92

57,492

1992/93

62,368

1993/94

95,547

1994/95

116,057

Source: Nairobi City Council - Abstract of Accounts for respective years.

Refuse removal and disposal

The collection of garbage in Nairobi has become a thorny issue at City Hall. The Council lacks the right equipment, especially trucks, and, as a result, mountains of garbage remain uncollected for months and sometimes years, thus posing a health hazard to city residents.

The City's Water and Sewerage Department is responsible for collecting garbage fees. These charges are included in the consumer's monthly water bills and include a one-time charge for supplying a dustbin and a fixed monthly fee for refuse collection. The rates vary from area to area, with the low density areas paying more. Garbage collection fees do not cover costs and the City is simply not able to meet the demand for these services.

In middle and upper income areas of Nairobi, private garbage collectors have managed to convince the inhabitants to contribute a small fee (about Ksh. 200 per month) to allow them to collect and dispose the garbage, as part of a process of unplanned privatization. However, in low income areas, where 55 per cent of city residents live, the residents cannot afford to pay the private garbage collectors and therefore remain at the mercy of City Hall.

In an attempt to initiate a more deliberate process of privatization of urban services, the Government has directed the Nairobi City Council, and other local authorities, to work out modalities of privatising refuse collection activities, with a view to making the management of waste disposal more efficient and effective. The City council, with assistance from the Japanese Government, is carrying out a pilot project through which garbage collection in the Central Business District of the City has been contracted out to a private operator.

In Mombasa, refuse removal is largely done by the Municipal Council. The normal charge is included in water bills, and is very low, ranging from Ksh. 7.00 to Ksh. 20.00 per water bill. The council also charges businesses some specified fees for refuse collection, either on an annual or monthly basis. It also provides hire services, using its vehicles. The collection of this levy is generally very inefficient. The Municipality plans to privatize all refuse collections in the mainland and concentrate on refuse collection within the island.

Public housing

Nairobi City Council owns and maintains houses in Mariakani, Karioko, Joseph Kangethe and thirty-seven other estates in the city. Many tenants occupy prime properties rented out by the City Council at rents far below the market rates. In most cases, the rents are 50 per cent of market rates. While the Council has continued to receive some surplus income from the rental of these units, mainly because little is spent on maintenance, a lot more could be earned if a little was invested to improve their physical condition to allow the same to be rented out at market rates. The Council has also had problems in collecting outstanding rents. By June 1995 KPounds 6,489,338 remained unpaid to the Council.

Mombasa Municipality has a large stock of houses. It has 4000 units of various sizes and different categories, most of them being on the Island. Half are for use by municipal staff while the rest are available for public use. There is much pressure on available rental houses, as clearly demonstrated by the demand for council houses, which are actually rented well below the market price. About 10,000 applicants are on the waiting list for any of the houses that may be available. Rents are low, in some cases below Kshs. 500.00 for two-roomed flats or single rooms. The maintenance of the houses is very poor. It has been observed that 70 to 90 per cent of the old houses require re-development. As in the case of Nairobi, Mombasa earns some surplus income on its housing stock, but more surplus income could be generated with a little investment in maintenance.

Education

Primary education is one of the mandatory services provided by the municipalities. In municipally-owned primary schools, the central government pays the teachers' salaries (since 1985/6), but there is some element of cost-sharing, whereby parents provide facilities in their schools. There is no fees payable in primary schools.

Nairobi City Council's Education Department runs a number of day primary schools, one boarding primary school (Nairobi Primary School), a number of pre-school units and day nurseries. Nairobi Primary School charges Kshs. 8,000 boarding fees per term. The facilities are also hired out for weddings, games, etc. during vacations as a means of generating additional income to the school. Primary education is free in Kenya and therefore no tuition fee is payable by parents. Because primary education is free, the Council hardly makes any money from provision of this service. Only Nairobi Primary School meets at least 50 per cent of its costs from boarding charges and other incomes. The Council has to locate funds from other sources to expand and maintain facilities. As a result, the City's Education Department has continued to operate at a loss, with expenses rising each year by an average of 12 per cent per annum.

As part of cost-sharing, most primary schools charge a one-off levy ranging from Kshs. 3,000.00 to Kshs. 6,000.00 before admitting a child into Standard One. This is considerably above the means of the low-income groups, the result being that many children are not able to gain admission to school.

In Mombasa, the Council runs 13 nursery schools - 5 on the Island, 3 on the Mainland North, 2 on the Mainland West and 3 on the Mainland South. These are not significant, given that there are 76 privately owned and 108 self-help nursery schools in Mombasa. Children in Municipality-run schools are also charged fees, but this is also relatively low. The council is, in addition, responsible for adult education. It has 13 social halls, which are useful for the purpose. No fees are charged for this type of education.

Health services

Nairobi City Council operates a number of clinics and maternity units, in addition to Pumwani Maternity Hospital. The city also carries out a number of other public health-related activities, such as mosquito control, disinfestation (removal of pests such as rats, mice, bats and pigeons from schools, factories and private premises), inoculation, inspection/testing of food, ambulance services, laboratory services, mortuary and burial/cremation services, cleaning, surveillance, and registration of births and deaths services.

The current charges for each activity are contained in the 1995 Approved Schedule of Fees. In total, however, the income earned can hardly meet 35 per cent of the department's gross expenditure, as illustrated in Table 11 below. The Council needs to seriously re-evaluate some of its activities and probably discontinue some of them.

Table 11. Public health, Nairobi City Council: analysis of expenditure and income (KPounds '000)

Year

Gross Expenditure

Income

Net Expenditure

Income as per cent of Gross Expenditure

1992/93

17,810

4,867

12,944

27.3

1993/94

19,196

2,915

16,281

15.2

1994/95

42,574

15,166

27,408

35.6

1995/96

32,209

4,579

27,630

14.2

Source: Nairobi City Council - Abstracts of Accounts

Mombasa Municipal Council provides extensive health services. It also provides sanitation and primary health services. There are 10 hospitals and nursing homes, and 59 health centres, dispensaries and sub-centres within the municipality. While the council does not run any hospital, it runs the bulk of the other facilities. Indeed, the council provides most of outpatient and maternity and family planning services. Most of the services are concentrated on Mombasa Island.

Assessment

Analysis of income and expenditure for the various services provided by Nairobi City Council reveals the following features (see Table 12):

· Incomes derived from the provision of services do not meet the cost of those services. Except for 1982, 1986/87, 1992/93 and 1995/96, in all other years the Council realised a deficit from all operations;

· The average annual deficit is 14 per cent. The Council has therefore relied on income from rates and the service charge to meet these recurring deficits; and

· Unfortunately, this deficit is not only restricted to service operations, but to the entire Council operations.

· Table 13 shows the percentage of fees and charges to the total income from operation (rates, service charge, grants and dividends, and income from services). The income from fees and charges has averaged 35.6 per cent in the last seven years (1990/91 - 1996/97).

The tariffs applied on refuse removal, public housing, education and health services cannot adequately support the expenses incurred by the Council to provide such services. As a result of this, the Council has incurred deficits from provision of these services, over the years.

In Mombasa, the two major sources of municipal revenue that represent charges for services have been the service charge and housing and estates (mainly rental income from council property). Cost sharing services have also earned some significant revenue. The service charge yield has risen from Ksh. 64 million in the first year (1989/90) to Ksh. 77 million in 1995/96, representing a growth rate of about 20 per cent. Data for 1996 shows that it was the second most important source of revenue for Mombasa Municipality, after rates. Housing and estates revenue generation has also traditionally off-set expenditures. Revenue collection from this source is now around Ksh. 30 million, from around Ksh. 15 million in the early 1980s.

Cost sharing in Mombasa has also grown, reaching a revenue total of Ksh. 7.4 million in 1995/6, and, in fact, surpassing the budgeted estimate for that year. This, however, cannot be said of the revenue collection related to sewerage, an area in which there still seems to be collection difficulties. In the education sector, revenue collection is rather small, but this is expected due to non-collection of revenue from primary schools, as education is free at this level.

In the case of Mombasa, it can be said that, in general, the level of revenue collection in this category of municipal revenue source is good, with the exception of sewerage. This would have performed better if Mombasa were a water undertaker. The fact that it lacks a natural source has prevented the latter development.

The various levies and charges in this category of municipal revenue are important sources, and have consistently provided significant returns. There are, however, some problems with the service charge, which have led to consideration of other sources of revenue for local authorities in Kenya.

Table 12. Trends in charging for urban services, Nairobi City Council, 1980-1996/97 financial years (KPounds '000 p.a.)

Financial Years

Total Expenditure from Services

Total Income from Services

Net Expenditure from Services

Per cent age change in net expenditure

1980

16,499

3,127

13,372

-

1981

21,020

3,893

17,127

28.1

1982

23,118

4,271

18,847

10.0

1983

21,800

4,680

17,120

- 9.2

1984

22,810

5,236

17,574

2.7

1985/86

32,419

7,738

24,681

40.4

1986/87

23,955

5,396

18,559

-24.8

1987/88

31,455

6,487

24,968

34.5

1988/89

37,964

7,849

30,115

20.6

1989/90

44,292

13,273

31,019

3.0

1990/91

58,129

12,051

46,078

48.5

1991/92

70,455

16,169

54,286

17.8

1992/93

60,458

20,659

39,799

-26.7

1993/94

62,611

21,522

41,089

3.2

1994/95

115,758

42,020

73,738

79.3

1995/96

96,537

33,670

62,867

-14.7

1996/97

107,335

36,789

70,546

12.2

NB: The services include: Education, Public Health, Public Works, Administration and general charges, Social Services & Housing and Environmental Services have only been considered in 1996/97 (Excludes Water and Sewage figures)

Source: Nairobi City Council - Abstract of Accounts

Most of the levies on and charges for services are responsive to population changes and incomes. The service charge responds well to increased employment and incomes. Some sub-categories are, however, not responsive, as they are dependent on large capital outlays. These include housing, sewerage and both health and educational facilities. Almost all categories are also not very responsive to inflationary changes due to the requirement for council and ministerial approval, which often does not come soon enough.

Table 13. Fees/charges as a percentage of total income from operation, Nairobi City Council

Period

Total Income
KPound '000 p.a.

Income from Fees/Charges
KPound '000 p.a.

Per cent of Fees/Charges to Total Income

1980

14,540

8,161

56.1

1981

20,085

9492

47.3

1982

26,381

9751

36.9

1983

25,718

9,373

36.4

1984

25,309

9,170

36.2

1985/86

34,590

10,093

29.2

1986/87

22,311

5,178

23.2

1987/88

28,510*

6,533

22.9

1988/89

34,677

9,757

28.1

1989/90

42,040*

17,494

41.6

1990/91

38,481

10,687

27.7

1991/92

53,285

16,329

30.6

1992/93

68,019

25,139

36.9

1993/94

86,865

28,617

32.9

1994/95

105,784

44,374

41.9

1995/96

113,596

37,366

32.9

1996/97

103,791

48,439

46.7

Source: Nairobi City Council - Abstracts of Accounts

* Estimated

Charges for services are generally regressive, because they tend to favour those who can afford them, even where the needs may be basic. This is certainly the case with regard to the newly emerging cost-sharing approaches in the health and education sectors. Subsidies have been unsustainable, and lack of funds has led to their withdrawal.

Administratively, water charges collection in Nairobi and refuse levy collection in Mombasa have lagged behind. In the case of the service charge, collection from businesses and employees in the formal sector is relatively easy, but difficult from those within the informal sector. There is widespread failure to reach this latter group, and enforcement has been lacking.

While charging is accepted in principle, increases are difficult due to the sensitivity that this has both at council and national level. For a variety of reasons, the central government is often unwilling to approve increases in rents, water tariffs and even the service charge. There has also been wide discontent regarding payment of water charges: in Nairobi due to notoriously inconsistent supply and in Mombasa due to the perennial water shortage problem. Rent increases are also unlikely to be viewed positively, due to delayed maintenance of the houses. Cost sharing has been criticized due to its effects on health and nutrition, particularly on vulnerable parts of the population.

Although graduated personal tax (GPT) was abolished in the 1970's, its yield was considerably higher than that of its replacement, the service charge. The service charge itself ought, strictly, to be considered as a tax on income rather than a charge for urban services rendered. This misconception about the nature of the service charge has partly contributed to its unpopularity, as residents see no direct linkage between payment of the charge and provision of services.

Privatization, though much talked about in recent years, has only begun to take root in Nairobi, beginning with the contracting of solid waste removal in the city centre and the spontaneous involvement of private companies in some parts of the city. However, the involvement of the private sector in the provision of services in Mombasa has been very limited. It has been restricted to water supplies. The latter has not developed on the impetus of the council, which has never in any case been a water undertaker, but as a result of severe water shortages in the town.

The United Republic of Tanzania

Local authorities in the United Republic of Tanzania are empowered by the central government to carry out the following:

· impose charges in respect of the services rendered
· make bye laws for the drainage of streets, lands, compounds and new buildings
· build and maintain hospitals, health centres and maternity clinics
· establish, maintain and operate and control drains and public lavatories
· establish, maintain and operate and control drainage and public works, and,
· establish, provide and control public water supplies and impose water rates.

For historical reasons, local authorities in the United Republic of Tanzania have been regarded as being weak, and, as a result, major public utilities such as water and electricity are provided by parastatal corporations or by central government departments, with little participation by local authorities. In the case of education, local authorities act as agents for the central government which is supposed to give them grants to adequately provide such services. Nevertheless, urban authorities are empowered to collect some fees from the beneficiaries of these services.

Water and sanitation

Until very recently, water in Dar es Salaam was provided by a parastatal organisation known as the National Urban Water Authority (NUWA). In 1996, NUWA and DSSD were merged to form the Dar es Salaam Water and Sewerage Authority (DAWASA) which is currently responsible for the provision of water and sanitation services to the city of Dar es Salaam. It is under the Ministry of Water. Water in other urban areas is provided by the Regional Water Engineer.

The role of the two urban authorities under study in the supply of water and sanitation services has been limited to collecting cesspit emptying fees, water pipe installation fees, and storm water drainage fees. The revenue yielded is very low, so the contribution to overall revenue is very low as well and is not analysed.

Sanitation matters in Dar es Salaam were, until recently, run by the Dar es Salaam Sewage and Sanitation Department, which was responsible for constructing, maintaining, operating and managing collector sewers and oxidization ponds. The City's Sanitation and Service bye-laws define charges for individual services such as pit emptying and sewer connections. The DSSD was established with the help of the World Bank and was first located under the Ministry of Lands. It was later on transferred to the Ministry of Water, and until its recent merger with NUWA, was a semi autonomous department under the DCC. In Mwanza, sanitation matters are dealt with by the Regional Water Engineer.

There has been advocacy for water and sanitation services to be handled by local authorities rather than by central government or national agencies. The government, however, argues that urban authorities are not in a position to handle the complex issues of managing urban water supply, considering the high level of coordination and the heavy investment required.

Electricity

Electricity in the United Republic of Tanzania is provided by a national parastatal organisation known as Tanzania Electricity Supply Company (TANESCO). Urban authorities have little or nothing to do with this, except that they pay the corporation for the use of electricity.

Refuse removal

Both the DCC and the MMC have a fleet of refuse collection vehicles. Direct charging for refuse removal is undertaken in connection with corporate bodies such as companies, hotels and restaurants. Individual households are not charged. MMC charges TShs. 15.00 per kg of refuse removed, while the DCC charges only TShs. 4.00 per kg. These charges are generally on the low side. Recently the DCC used Tshs. 4.0 billion to rehabilitate its waste removal vehicles and uses about Tshs. 15.00 million monthly to run its waste removal vehicles. As the figures in Table 14 show, the money collected for refuse removal is low. Collection is effected mainly in high income areas, as well as from business establishments. These figures show that while yields from refuse collection charges were low or nil in the past, the trend is towards increasing the collection of these in recent years.

Table 14. Refuse collection charges, Dar es Salaam, Mwanza 1984-1996 (million Tshs)

Years

Dar es Salaam

Mwanza


Estimates

Actual

Estimates

Actual

1984

na

na

0.04

0.04

1985

0.5

0.9

-

-

1986

1.0

0.5

0.04

-

1987

-

-

0.05

-

1988

0.8

0.5

0.1

0.07

1989

24.0

18.9

0.1

0.01

1990

0.8

0.5

0.1

0.009

1991

2.5

1.7

-

-

1992

2.4

2.3

-

-

1993

4.0

0.5

3.8

3.9

1994

6.5

0.8

3.9

4.3

1995

30.0

6.5

4.8

5.0

1996

30.0

26.1

5.8

7.0

Public housing

While many urban authorities in the world are also the custodians of public housing, this has not been the case in the United Republic of Tanzania. Until recently, public housing was owned and managed by a parastatal corporation known as the National Housing Corporation (NHC) formed in 1962.

During the colonial era some 4356 units of "African government quarters" were constructed by the government and were managed by urban authorities. On the formation of the NHC, these quarters were passed over for management from the urban authorities to the NHC. In 1995, during the process of streamlining its operations, the NHC handed these houses back to the urban authorities. The bulk of these went to the DCC.

The rents charged on these properties are historical and some were fixed in the 1960s. The DCC has announced plans to raise these rents to Tshs. 3,000.00 per month per unit. This has raised hue and cry among the sitting tenants who are now considering court action. The amount of money collected as house rent is very low and it is not considered fruitful to analyse it further.

Education services

Urban authorities are entrusted with the running of primary education. They do so as agents of the government, which in the past pledged to fund them fully to meet this task. The government decided on this approach to ensure equal access to quality education for all children. Nevertheless, the authorities are supposed to collect some fees, set by category of expenditure, from the parents to meet the cost of this education. Nevertheless, contributions higher than the set levels have been collected, depending on the willingness of the parents to contribute and on the proposals of the parents committees. The government stand however has always been that while it required parents to contribute to primary education, pupils should not be denied education if their parents cannot pay. Permission is required from the Ministry of Education to levy charges above TShs. 5,000.00.

Table 15. UPE contributions/fees, Dar es Salaam and Mwanza 1984-1996 (million Tshs)

Years

Dar es Salaam

Mwanza


Estimates

Actual

Estimates

Actual

1984

na

na

1.5

1.5

1985

5.7

8.0

-

-

1986

6.5

6.0

1.6

1.6

1987

3.0

1.8

1.7

1.1

1988

15.9

5.7

1.7

1.4

1989

47.0

3.1

3.5

2.9

1990

32.8

0.09

6.4

2.8

1991

0.1

0.06

-

-

1992

38.5

11.6

-

-

1993

20.0

15.0

7.5

4.4

1994

9.3

12.2

8.0

5.6

1995

15.0

11.3

7.6

6.1

1996

15.0

7.9

8.0

6.9

Primary education is characterised by under-funding. In 1985/86 for example, it was calculated that it cost Tshs. 468.00 per annum to educate a primary school child. The government, however, allocated only Tshs. 100.00. In 1991, the cost of educating a primary school child had gone up to Tshs. 1,200.00, yet the government allocated only TShs. 200.00. Local authorities could not make up this shortfall, leading to the deterioration of the primary education services, manifested in demoralised teachers, overcrowded classrooms, lack of desks and textbooks and deteriorating buildings.

The wild fluctuations in both the estimates and the actual figures collected points to a pattern of random collection of fees, although the picture from Mwanza is rather impressive (Table 15). Not only is collection going up, but with a much lower number of students, Mwanza was able to collect nearly as much as Dar es Salaam in 1996. The DCC collects a substantial although fluctuating amount, as school fees from English medium schools (Table 16).

Health services

As is the case with primary education, urban authorities are supposed to run primary public health services. The DCC runs 66 health facilities, that is 3 district hospitals, 4 health centres and 59 dispensaries. With a few exceptions, the central government is supposed to give grants to local governments to meet the full cost of providing these health services.

Table 16. School fees, English medium, Dar es Salaam, Mwanza 1984-1996 (million Tshs)

Years

Dar es Salaam

Mwanza


Estimates

Actual

Estimates

Actual

1984

na

na

-

-

1985

15.0

13.7

-

-

1986

13.0

12.7

-

-

1987

5.0

3.3

-

-

1988

22.0

10.5

-

-

1989

15.0

5.5

-

-

1990

14.3

0.02

-

-

1991

32.5

7.3

0.4

1.0

1992

32.5

16.1

1.1

-

1993

18.0

16.2

-

-

1994

17.0

14.0

-

-

1995

18.0

15.2

-

-

1996

-

21.5

-

-

Increasingly, however, the government is failing to provide sufficient grants. Cost sharing was therefore introduced in the health sector (in 1992 in Mwanza, and in 1994 in Dar es Salaam). The financial resources going to the urban health sector come from central government grants; resources collected by the local authorities; and vertical programmes such as the expanded programme on immunisation, the essential health programme, the national family planning programme, the national AIDS control programme, and so on. The estimated allocation per capita in Dar es Salaam was calculated to be US$2.7 in 1995 (DSUHP, 1996). This is a very low figure and is reflected in the deterioration of health services in most areas of the United Republic of Tanzania, as evidenced by unserviced buildings, poor waste management, inconsistent power and water supply, shortage of medicines and other supplies such as linen, syringes, beds, and so on.

It is not possible to establish how much is collected by the urban authorities as cost sharing in the health sector, but it is clear that in the absence of other funding, the rates of cost sharing are very low. The amount collected in cost sharing is put in special accounts and used directly by the health centres concerned in conjunction with aid from donor agencies. Fees collected for medical examination and for inoculation or vaccination are shown in Tables 17 and 18.

Assessment

Overall, charges for the services provided remain low and possibly short-collected. The contribution of these charges to the total revenue of the two authorities is less than 1 per cent throughout the period under review. There are signs that the efforts of the recently installed Dar es Salaam City Commission to enhance revenue collection are showing positive results in the form of higher collections. Again, as a general observation, the amount collected has varied considerably over the years, although the trend should be growing collection year after year. While Dar es Salaam continues to collect water pipe installation fees, Mwanza has not collected this since 1992. Refuse collection charges have shown a fluctuating trend with steep increases in the past two years, and four years in the case of Dar es Salaam and Mwanza, respectively.

Table 17. Medical examination fees, Dar es Salaam, Mwanza 1984-1996 (million Tshs)

Years

Dar es Salaam

Mwanza


Estimates

Actual

Estimates

Actual

1984

na

na

-

-

1985

-

-

-

-

1986

-

-

-

-

1987

-

-

-

-

1988

-

-

-

-

1989

-

-

-

-

1990

-

-

-

-

1991

-

-

2.6

1.9

1992

5.0

3.8

2.6

1.4

1993

4.0

2.7

-

-

1994

4.5

1.8

-

-

1995

5.0

2.3

-

-

1996

-

20.2

-

-

Revenue from Universal Primary Education (UPE) fees has been fluctuating wildly for no apparent explanation. In Dar es Salaam the highest figure collected was in 1993, but this has surprisingly gone down in each of the subsequent years. This is in spite of the increase in the number of pupils enrolled, and the raising of the UPE fee from Tshs. 200.00 to TShs 1,000.00. After collecting nothing in 1991 and 1992, Mwanza has shown an upward trend since 1993. Revenue from medical fees and inoculation and vaccination fees is very low (virtually none in the case of Mwanza) but sharply increased in Dar es Salaam in 1996. Where both Mwanza and Dar es Salaam collect the item of revenue, Mwanza, with a much less population, would appear to be relatively better off in collecting revenue compared to Dar es Salaam.

Most of the charges collected for urban services are determined by the central government and can only be revised by it. The items charged for under health and education are narrow (many people meet the costs of these indirectly), while new users of services like piped water are not easily brought under the umbrella of charging since they live in informal settlements.

In view of the low level of rates charged and the population covered, it is difficult to really analyse the question of equity, but it can be pointed out that the poor rely heavily on public education and public health services. Charging for these could exacerbate poverty.

Table 18. Inoculation/vaccination fees Dar es Salaam, Mwanza, 1984-1996 (million Tshs)

Years

Dar es Salaam

Mwanza


Estimates

Actual

Estimates

Actual

1984

na

na

-

-

1985

0.9

0.5

0.02

0.009

1986

1.0

1.0

0.02

0.02

1987

1.0

0.9

0.02

0.02

1988

2.0

0.7

0.03

0.02

1989

2.8

3.2

0.01

0.007

1990

2.0

1.6

0.01

0.03

1991

2.5

0.8

-

-

1992

2.5

1.5

-

-

1993

2.5

2.3

0.03

0.02

1994

3.0

2.4

0.03

0.1

1995

3.0

1.9

-

-

1996

30.0

13.5

-

-

Already there is evidence of higher shortages of desks, classrooms and teachers and a higher incidence of diseases in Temeke District, considered the poorest of the three districts making up Dar es Salaam (Kironde 1996).

There are signs that the two authorities lack the administrative capacity to administer these charges. This is reflected in inconsistent estimations and collections. Overlapping powers between the central government and the urban authorities in areas such as water and sanitation services, education and health, exacerbate the administrative problem. Also many parts of the urban areas are inaccessible and their policing is nigh impossible, so that it is difficult to administer charges such as those related to water and refuse collection. There has been considerable concern raised with respect to collections for UPE. There have also been complaints that much of this money is collected and utilised privately, but there is not the policing capacity to be able to follow up on all the primary schools in these authorises.

Many charges for services, such as those for health and education services, are politically sensitive and unpopular. This makes the charges remain low and inelastic. Excluding those who are unable or unwilling to pay is anathema to government. Thus, many people do not pay although they may utilise services such as education.

Uganda

Water supply

In Kampala City Council and Jinja Municipal area, water is a responsibility of a parastatal body called National Water and Sewerage Corporation. Until the Corporation was created in 1970, the large towns, Kampala and Jinja inclusive, used to supply water to their residents and charge for the same. The Water and Sewerage Corporation operates in only seven large towns, the other remaining towns have the responsibility for providing the service. Charging for water and sanitation has not yet been started in these smaller towns.

Electricity

In the same way that water is supplied by a parastatal body, electricity is also supplied by the Uganda Electricity Board, which was created almost 40 years ago.

Refuse collection

Both Kampala and Jinja provide this service. As of now, none of the two is charging for this service directly and yet it is one of the most expensive services the two Councils are struggling to provide. The city population's rate of garbage generation has exceeded KCC's budget provisions to enable it to effectively clean the city. In some areas of Kampala the service has been contracted out. However, Jinja charges some amount of money from market vendors, but this is small - about Ushs. 15,000,000 per year from all the markets.

Public housing

Both Kampala and Jinja have since the 1960s refrained from construction of new housing estates for the residents. Kampala has a number of housing estates situated at Nakawa and Naguru for low-income residents. These are in complete disrepair. The Nakawa estate had been declared unfit for human occupation, but due to political pressure the issue was dropped. Income from housing seems to fluctuate from one year to another. However, interviews with tenants indicate that there has been resistance to increasing rents for KCC houses. The likely results, among others, is that the houses will remain ill-maintained until they are sold, the latter being a most likely event which is already being discussed.

Education

The Education system was based on delegation to local authorities until decentralisation was introduced during the 1993/94 Financial Year. Kampala City Council for a number of years has been adding UShs. 500.00 on the graduated personal tax tickets for education and, because of this, it is not possible to determine the exact yield from contributions towards education. Jinja has also been doing the same. What, however, appears in the budgets of both authorities is capital expenditure for construction of schools, without indicating the actual source of funding (Ushs. 6.4 billion during 1996-97 for Kampala City Council alone).

With effect from 1997, primary education is supposed to be free and it is not clear whether or not local governments will be allowed to charge people for education. However, local governments can charge fees for those who do not qualify for universal primary education, although the number is very small for the whole country. Out of 5.2 million children enrolled in primary schools countrywide, only 400,000 could be charged school fees.

Health services

Generally, this service is provided free. An attempt has been made to introduce cost-sharing of medical services, but the scheme has not succeeded. Local governments normally use funds from other sources to deliver this service. Slowly, the service is being contracted out, particularly for those who can afford. User charges are being encouraged by the Ministry of Health, but collections from such charges are at present almost negligible.

Concluding observation

Local governments in Uganda have not been effectively charging for the services which they provide, with the exception of rent from residential properties in the case of Kampala and of some commercial premises in the case the Jinja. However, concurrent with this study, another study financed by IDA (World Bank) has been taking place to establish the basis and the potential of user-charges for urban services. The study was due to be completed in February 1998. It is thus most likely that these services will soon be subjected to charges.