Effects of the Multi-Currency Regime on Local Government Finance: A Case of Harare City Council (HCC)

Abstract

This qualitative case study examines the impact of the multi-currency regime on local governance revenue, with a specific focus on the Harare City Council (HCC) in Zimbabwe. The primary objective of this study is to investigate the impact of the multi-currency system on revenue generation within the HCC. The research also analysed the impact of the multi-currency system on resource allocation and service delivery. Using a purposive sample of 14 participants, including HCC officials and residents, the study utilized semi-structured interviews and open-ended questionnaires for data collection, analysing the findings thematically within the framework of fiscal federalism. The results reveal that the multi-currency regime presents significant challenges for HCC's revenue collection, adversely affecting resource allocation and service delivery. Key issues include the lack of control over monetary policy, which leads to conflicts between HCC and taxpayers struggling with currency instability. Recommendations to address HCC's revenue challenges include establishing transparent revenue collection systems, implementing innovative financing mechanisms, and strengthening intergovernmental fiscal relations to empower local authorities with sufficient resources and autonomy. This study enhances the understanding of multi-currency regimes' effects on local governance and service delivery in developing countries, aiding in the formulation of inclusive and effective policies. Lastly the research suggested approaches that can be employed by the HCC to address revenue and service delivery challenges under the multi-currency system.