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COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
(MSc PROGRAM)
DETERMINANTS OF DONOR FUND UTILIZATION: A
CASE OF UN AGENCY FUND IN AMHARA REGION
MESFIN BAYKEDAGN
JUNE, 2020
DEBRE BERHAN, ETHIOPIAN
DEBRE BERHAN UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
DETERMINANTS OF DONOR FUND UTILIZATION: A CASE
OF UN AGENCY FUND IN AMHARA REGION
BY: MESFIN BAYKEDAGN
ADVISOR: ABEBAW FISEHA (ASSISTANT PROFESSOR)
A THESIS SUBMITTED TO THE DEPARTMENT OF ACCOUNTING
AND FINANCE OF DEBREBREHAN UNIVERSITY FOR THE
PARTIAL FULFILMENT OF MASTER OF SCIENCE IN
ACCOUNTING AND FINANCE
JUNE, 2020
DEBRE BERHAN, ETHIOPIA
I
DEBRE BERHAN UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
DECLARATION
I MESFIN BAYKEDAGN, declare that the thesis entitled “Determinants of Donor Fund
Utilization: A Case of UN Agency Fund in Amhara Region” is my original work. I have carried
out the present study independently with the guidance and support of the research advisor,
ABEBAW FISEHA (Assistant Professor) any other contributors or sources used for the study
have been appropriately acknowledged. Moreover, this study has not been submitted for the
award of any Degree or Diploma Program in this or any other Institution.
NAME: MESFIN BAYKEDAGN
SIGNATURE: _________________
DATE: _______________________
II
DEBRE BERHAN UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
ENDORSEMENT
This is to certify that MESFIN BAYKEDAGN has carried out his research work entitled
“Determinants of Donor Fund Utilization: A Case of UN Agency Fund in Amhara Region”
for the partial fulfillment of Masters of Science in Accounting and Finance at Debre Berhan
University. This study is original and is not submitted for any degree in this university or any
other universities and is suitable for submission of Masters of Science in Accounting and
Finance.
NAME: ABEBAW FISEHA (Assistant Professor)
SIGNATURE: _____________
DATE: ___________________
III
DEBRE BERHAN UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
THESIS APPROVAL
As members of Board examiners of the final master thesis open defense examination, we certify
that we have read and evaluated the thesis prepared by MESFIN BAYKEDAGN entitled
“Determinants of Donor Fund Utilization: A Case of UN Agency Fund in Amhara Region”.
We recommend that thesis be accepted as fulfilling the thesis requirement for the degree of
masters of science in Accounting and Finance.
BOARD OF EXAMINERS
EXTERNAL EXAMINER
________________________________________ ____________ ____________
NAME SIGNATURE DATE
INTERNAL EXAMINER
________________________________________ ____________ ____________
NAME SIGNATURE DATE
CHAIR PERSON
________________________________________ ____________ ____________
NAME SIGNATURE DATE
IV
ACKNOWLEDGEMENTS
Above all, my heartfelt thank goes to source of everything and the compassionate God and sit
Marry, without them, I couldn’t have come up such a result.
Besides, I want to address my in-depth gratitude for respected advisor Abebaw Fisha (Assistant
Professor of Accounting and finance) this kind, unreserved help and persistent guidance in the
preparation of this thesis. This small piece cannot fully convey my heartfelt gratitude towards my
advisor.
I would like to express my deepest gratitude to Mr. Abebe Negash who encourage and provide
relevant data for my study and gracefully I would like to thanks data collectors from sectors
and also my friends Mr. Solomon Estifanos, Abaynew Demissaw , Dereje Mamo, Dereje Araya,
and Asinakew Negirew they support and share me for your experience and Technical skills
during my study .
I want to indebted to all respondents who help me filling the questionnaires with patience and by
scarifying their invaluable time without them this thesis would not have seen the light of day.
And I extend my thanks bureau friends in general and my immediate bosses Mr. Zenebe
Meshesha in particular who allowed me to attend my lesson.
Last but not least, I heartily thank my love Miss Nigat Girma who helped me in caring and upset
during my study period.
V
TABLE OF CONTENTS
DECLARATION................................................................................................................... I
ENDORSEMENT ................................................................................................................ II
THESIS APPROVAL ......................................................................................................... III
ACKNOWLEDGEMENTS ................................................................................................. IV
LIST OF ACRONYMS AND ABBREVIATIONS ............................................................ VIII
LIST OF TABLES ............................................................................................................... X
LIST OF FIGURES ............................................................................................................ XI
ABSTRACT ...................................................................................................................... XIII
CHAPTER ONE .................................................................................................................. 1
INTRODUCTION ................................................................................................................ 1
1.1. BACKGROUND OF THE STUDY ........................................................................................... 1
1.2. STATEMENT OF THE PROBLEM ........................................................................................... 5
1.3. RESEARCH QUESTIONS ...................................................................................................... 7
1.4. OBJECTIVE OF STUDY ........................................................................................................ 7
1.4.1. General Objective ..................................................................................................... 7
1.4.2. Specific Objectives .................................................................................................... 7
1.5. HYPOTHESIS OF THE STUDY .............................................................................................. 7
1.6. SIGNIFICANCE OF THE STUDY ............................................................................................ 8
1.7. SCOPE OF THE STUDY ........................................................................................................ 8
1.8. LIMITATION OF THE STUDY ............................................................................................... 9
1.9. ORGANIZATION OF THE STUDY.......................................................................................... 9
CHAPTER TWO ............................................................................................................... 10
REVIEW OF RELATED LITERATURE.......................................................................... 10
2.1. INTRODUCTION ................................................................................................................ 10
2.2. THEORETICAL LITERATURE REVIEW ............................................................................... 10
VI
2.2.1. The Term Non-Governmental Organizations ......................................................... 10
2.2.2. Development and Growth of NGOs ........................................................................ 11
2.2.3. Evolution of the Resident Coordinator System (RC System) .................................. 13
2.2.4. International Response to Aid Effectiveness ........................................................... 14
2.2.5. Dimension of Donor Funds Utilization................................................................... 16
2.2.6. Agency theory.......................................................................................................... 23
2.2.7. Government Failure Theory ................................................................................... 24
2.3. EMPIRICAL LITERATURE REVIEW .................................................................................... 24
2.3.1. Utilization of Aid in Different Countries ................................................................ 24
2.3.2. Determinants of Fund Utilization by NGO’s .......................................................... 27
2.4. CONCEPTUAL FRAMEWORK OF STUDY ............................................................................ 28
2.5. RESEARCH GAP ............................................................................................................... 31
CHAPTER THREE ........................................................................................................... 32
RESEARCH METHODOLOGY ....................................................................................... 32
3.1. INTRODUCTION ................................................................................................................ 32
3.2. POPULATION SAMPLE SIZE AND SAMPLE DESIGN ........................................................... 32
3.2.1. Study Area and Population ..................................................................................... 32
3.3. DATA TYPE AND SOURCE ................................................................................................ 35
3.4. DATA COLLECTION INSTRUMENT AND MEASUREMENT OF VARIABLE ............................ 35
3.5. METHOD OF DATA ANALYSIS ......................................................................................... 36
3.5.1. Descriptive Analysis................................................................................................ 36
3.5.2. Econometric Analysis.............................................................................................. 36
3.6. DATA VALIDITY AND RELIABILITY ................................................................................. 38
3.7. ETHICAL CONSIDERATION ............................................................................................... 40
CHAPTER FOUR .............................................................................................................. 41
RESULT AND DISCUSSION ............................................................................................ 41
4.1. INTRODUCTION ................................................................................................................ 41
4.2. RESPONSE RATE .............................................................................................................. 41
VII
4.3. DATA RELIABILITY AND VALIDITY ................................................................................. 42
4.4. DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS ..................................................... 42
4.4.1. Sex of the Respondents ............................................................................................ 43
4.4.2. Age of the Respondents ........................................................................................... 43
4.4.3. Education Level of the Respondents ....................................................................... 44
4.4.4. Job Position (Responsibility) of the Respondents ................................................... 45
4.4.5. Experience of the Respondents ............................................................................... 46
4.5. DESCRIPTIVE STATISTICS ................................................................................................ 47
4.6. SUMMARY STATISTICS ON CONTINUOUS VARIABLES ...................................................... 53
4.7. TREND OF FUND UTILIZATION ......................................................................................... 54
4.8. CORRELATION ANALYSIS ................................................................................................ 57
4.9. ECONOMETRIC ANALYSIS ............................................................................................... 59
4.9.1. Model Diagnostic Tests........................................................................................... 59
4.9.2. Regression Analysis ................................................................................................ 63
CHAPTER FIVE ............................................................................................................... 71
CONCLUSION AND RECOMMENDATIONS ................................................................. 71
5.1. CONCLUSION ................................................................................................................... 71
5.2. RECOMMENDATIONS ....................................................................................................... 74
5.3. POLICY IMPLICATION ...................................................................................................... 75
5.4. AREAS FOR FURTHER RESEARCH .................................................................................... 76
REFERENCES .................................................................................................................. 77
APPENDIX ........................................................................................................................ 84
VIII
LIST OF ACRONYMS AND ABBREVIATIONS
ADB Asia Development Bank
ARR Agency for Rehabilitations and Reconstruction
BOFEC Bureau of Finance and Economic Development
CLRM Classical linear Regression Model
CUB Cumulative undisbursed balance
DAC Development Assistance Committee
DaO Delivery as One
ECOSOC Economic and Social Council
ESTESP Earthquake and Tsunami Emergency Support Project
FACE Fund authorization Certificate Expenditure
GTP Growth and Transformation planning
HACT Harmonized Approach to Cash Transfer
HDI Human Development Index
HLF High level of forum
ICT Information Communication Technology
ILO International Labor Organization
IPS Institution for Policy Study
MOFEC Ministry of Finance and Economic Cooperation
N-COVID-19 Noble Corona Virus Disease 19
NGO Non- Governmental Organization
NPP Normality Probability Plot
ODA Oversee Development Aids
ODA Official Development Assistance
OECD Organization for Economic Co-operation and Development
OLS Ordinary Least Square
PIM Program Implementation Manual
PVO Private Voluntary Organization
RBM Result Based Management
RBZ Reserve Bank of Zimbabwe RBZ
IX
RC Resident Coordination System
TOL Tolerance
UN- Women United Nation Women
UNDAF United Nation Development Association Forum
UNESCO United Nation Education Scientific and Cultural Organization
UNFPA United Nation Population Fund
UNICEF United Nation Children Funds
VIF Variance inflation factors
WF World Food Program
X
LIST OF TABLES
Table 3.1: Sample Size ............................................................................................................... 34
Table 3.2: Pilot Survey Reliability Test ........................................................................................ 39
Table 4.1: Data Reliability Test .................................................................................................... 42
Table 4.2: Utilization of Fund by Sex of Respondent .................................................................. 43
Table 4.3: Utilization of Fund by Age Category of the Respondent ............................................ 43
Table 4.4. Utilization of Fund by Education Status of the Respondent ........................................ 44
Table 4.5: Utilization of Fund by Position of the Respondent ..................................................... 45
Table 4.6: Utilization of Fund by Work Experience Category of the Respondent ....................... 46
Table 4.7: Descriptive Statics of financial management factor .................................................... 47
Table 4.8: Descriptive statics of Harmonization UN Agencies .................................................... 48
Table 4.9: Descriptive statics of Technical factors ....................................................................... 49
Table 4.10: Descriptive of statics of Managerial factor ................................................................ 50
Table 4.11: Descriptive statics of Utilization of funds ................................................................. 51
Table 4.12: Summary of Statistics on Continuous Variables ....................................................... 54
Table 4.13: Trend of Fund Utilization donated by Agency in total .............................................. 54
Table 4.14: Interpretation of Strengthen of Correlation of Coefficient ........................................ 57
Table 4.15: Pearson’s Correlation Matrixes Correlations............................................................. 58
Table 4.16: Breusch-Pagan / Cook-Weisberg Test for Heteroskedasticity .................................. 62
Table 4.17: Multicollinearity between Independent Variables ..................................................... 62
Table 4.18: Model Summary ........................................................................................................ 63
Table 4.19: Analysis of Variance (ANOVA) ............................................................................... 64
Table 4.20: Multiple Regression Model ....................................................................................... 64
Table 4.21: Summary of Hypothesis ............................................................................................ 70
XI
LIST OF FIGURES
Figure 2.1: Conceptual Framework …………………………………………….……………….30
Figure 4.1: Trend of Fund Utilization ……………………….………………………………….55
Figure 4.2: Linearity Test…………………………………………………….………………….60
Figure 4.3: Normality Test………………………………………………………………………61
XII
LIST OF APPENDICES
Appendix 1: Questionnaire ………………………………………………………………..…….84
Appendix 2: UNDAF Program Budget Released and Utilization Rate (2011-2019)…….….......89
Appendix 2: Summary of UNDAF Fund Released and Liquidation Rate by Ips……..…..……..90
Appendix 3: List of sample Sector …...………………………….……………..…….….………91
Appendix 5: Financial management Factors………………….……….…..………….………….92
Appendix 6: Harmonization among UN Agency……………….………………….…..………...94
Appendix 7: Technical Factor…………………………………….………….……..……………95
Appendix 8: Managerial Factors ……………………………………………………..…………96
Appendix 9: Fund utilization ………………………………………………..…………………..97
XIII
ABSTRACT
The study was aimed to examine the determinants of UN Agencies funds utilization implementing
Sector in Amhara region. This study adopted quantitative nature of the survey type and it
attempts to examine the various factors (Financial Management Factors, Harmonization Factor,
Managerial factor, Technical Factors) that can affect UN Agency fund utilization in Amhara
region. The Correlation and Regression approaches was used to investigate the relationships
between the variables of the study in a causal system by avoiding bias, summarization of large
information and testability of the hypothesis. The target population was from Procurement,
Finance and Property Administration, planning budget process owner, external resource
mobilization or government cooperation and Internal Audit Departments of selected six UN
Agencies fund user implementing sectors. The researcher used a combination of Purposive,
stratified & random sampling and a total of 150 employees out of a sample frame 224
respondents were selected. The data was analyzed using STATA version 13 to assist the
researcher in answering the research questions. Descriptive and inferential statics were used to
analyze the collected data. Both the Pearson correlation and multiple linear regression outcome
indicated that perceptions of financial management factor, harmonization among UN agency
and government, technical factor and managerial factor have a positive and statistically
significant effect on UN agencies fund utilization. Considering the findings of the study,
maintaining, strengthening financial management system and associated operational
frameworks should be given priority to increase utilization of fund, additionally reforming and
simplifying UN agencies policies and procedures, improving managerial & employee capacity as
well as filling technical gapes of implementing sectors should be also adhered within the donor
fund utilizing organization
.
Keywords: Donor Fund utilization, Financial Management Factors, Technical Factors,
Managerial factors, Harmonization factors
1
CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
NGOs we restarted by united nation in 1945 in order to differentiate its charter between
specialized intergovernmental organization and international private agencies. According to
(report, 2006) all private are classified as private entities which are independent from the control
of government, political party, human rights groups, nonprofit making and non-criminal
organization with no intention to fight or challenge to interfere with constituted governments.
(David.W.Chapman, 2006) classified Non-governmental organization as either operational or
advocacy NGOs which is understood as a choice between large scale project undertaken
indirectly by influencing the political system and small-scale project carried out directly.
Operational non-governmental organization have the mandate of mobilizing resource in form of
donations (financial, asset), grants, contracts, materials skilled volunteers from governments,
foundation and companies to finance and sustain their project and programs which requires in
depth in-depth understanding of accounting, budgeting planning, use and efficient reporting.
Over the year’s multilateral, bi-lateral and NGOs organization were be involved in development
activities across the global, through technical and financial support from different donors, their
aim is to supplements government effort in development activities particularly the areas where
the government activities on very strong. In the early 1990s there began to be a recognition of the
importance of NGOs, they were found to have closer ties to on the grounds realities in
developing countries and perhaps more important to be able to deliver development aid
considerable more cheaply than states development activities (Willetts, P., 2001)
(yontcheva, 2005) carried out a research whose aim was to reassess the effectiveness of foreign
aid in terms of its impact on selected human indicators, they had chosen to evaluate how aid
affects infant mortality and illiteracy because improvement in both indicators are official
objectives of all donors. Their results show that NGOs aid may be more effective than
2
government action in reaching out to the poor. According to them infant mortality is flash
indicator of the living conditions of the poor (Boone, 1996)
The success of donor funded project is determined by technical factor, managerial factors,
harmonization policy and financial management and monitoring and evaluation. (O‟Connell
SA, Soludo CC, 2001) Argued that accountability is a key pillar of donor fund utilization .It
refers to full transparency regarding the purpose, content, responsibility and performance of the
development agency.
In all governments, resources earmarked for particular uses flow within legally defined
institutional frameworks. Typically, funds pass through several layers of government
bureaucracy down to service facilities, which are charged with the responsibility of spending the
funds. However, in developing countries, information on actual public spending at the frontline
level or by program is seldom available (Dehn J, 2003)
Most western countries-initiated aid programs in Africa in the 1960s in the wake of
independence from former colonial states. In this period, donors encouraged African
governments to plan their countries development, and urged the adoption of policies encouraging
industrial growth. In the 1970s, the focus of aid shifted increasingly to poverty alleviation with a
priority on projects to develop rural areas. In the 1980s, with the economic crisis in Africa and
debt defaults associated with it, donors were forced to reconsider the effectiveness of project aid
modality. In the 1990s, because of the limitation on the extent of reforms and the continuation
of low growth rates in most of Africa, donor agencies turned to look for other causes of lagging
growth. Poverty alleviation and improvements in the socio-economic welfare of vulnerable
households were again emphasized as the overarching objective of development (Adedeji, 2001);
(Round JI, Odedokun MO , 2003) (Ngwenyama O, Andoh-Baidoo KF, Bollou F,
MorawecynskiO, 2006). (Round JI, Odedokun MO , 2003) The government of Ethiopian to
guide the UN, s contributions to support Ethiopian growth and transformation plan (GTP). Most
donors have multiple objectives, UNDAF for example list goals or four thematic pillars are:
sustainable economic growth and risk reduction, basic social service, Government and capacity
development and women, youth and children.
3
In Ethiopian during the three five-year plan periods (1957-1973) 25% of the required total
investment was covered by external public capital. During the post revolution period, 37%, of
the total annual campaign of 1979 to 1983 was financed by foreign aid, (Tolessa A, 2001).
(Abegaz, 2005) Besides, foreign aid covered 23.2 % of total revenue in 2010/ 2011 fiscal year
(National Bank of Ethiopia Annual report,2010/2011/, 2010/2011). from the proposed budget bill
for Ethiopian Fiscal year 2010 E.c(2011/2018/ out of the total 320.8 billion,45 billion or 15 % of
budget is planned to be covered either by foreign assistance or loan and credit. This indicates
donor fund has been playing a great role in Ethiopia economy since 1950s. AS fowler (1995)
said there is need for institutions that are responsible for the management of these funds to come
up with the right framework and procedures in order to underwrite that fund given are utilized as
expected and that the funds serve purpose.
UNDAF in Ethiopian conducted access to and delivery of quality basic social service particularly
education, health, HIV/AIDS, WASH, and nutrition for UN women as signed in program
implementation manual. Over all In Amhara region there are seven UN Agencies families or
UNDAF programs, these are United Nations Children’s Fund (UNICEF),United Nations
Population Fund (UNFPA), United Nations Development Program (UNDP),United Nations
Women (UN Women), United Nations Educational, Scientific and Cultural Organization
(UNESCO),World Food Program (WFP), International Labor Organization (ILO)involved in
supporting the region government funding different developmental programs for the
achievement of the country’s priorities. The fund donated from UN Agencies to the regional
government is managed and utilized by different implementers within the government structure.
MoFEC at the national level and BoFEC at regional level coordinate, monitor and evaluate the
implementation, utilization and settlement process of the fund obtained from UN Agencies. UN
Agencies transfer the fund which is authorized in the annual work plan to BoFEC and BoFEC in
turn transfer the fund to regional bureau, zonal and worda offices of finance and economic
Cooperation The program implementation manual (PIM , 2013)
In Ethiopia UNDAF supported programs and projects are has been implemented based on
program implementation manual which specify, how, what and when the services/goods are
delivered. Program period is one of the major contractual clauses that aim at ensuring that the
services/goods are delivered within the agreed period and at the agreed cost. To continue
4
Ethiopia’s successful path towards becoming a middle income country and a climate resilient
green economy by 2025, the UNDAF 2012 - 2015 is strategically focused on supporting
Ethiopia’s continued growth and transformation in five areas including inclusive growth and
structural transformation, building resilience and green economy, investing in human capital and
expanding basic social services, good governance, participation and capacity building, and
equality and empowerment. The UN Country Team in Ethiopia were use their combined wealth
of technical expertise, global networks and reach to help the country realize the objectives of the
GTP II and stay on course for achieving its vision 2025.
In Ethiopian funding modalities or disbursement modalities specify how funds flow from the
donors to the government and/or to the relevant public body. They also specify the way reports
on the spending of the funds were submitted to the donors.
CHANNEL I– Aid and loan funds that flow through the MoFEC or BoFECs are included here
and the reporting system has to follow the same procedures.
CHANNEL II – This is one of the aid disbursement channels used by bilateral donors for
releasing resources to beneficiary institutions under projects financed by them.
The donors provide goods and/or funds to beneficiaries usually ministries.
CHANNEL III – Under this instrument, the donor directly controls all funds. The donors
maintain their own bank account, pays invoices directly to contractors and/or suppliers. (MoF
Donor Fund Flow, (Tir 5,1999). MoF, 1999)
UN Agency fund flow to our country by channel one modalities and UN Agencies program
implementation manual indicated that budget allocation to the Regions and to the implementing
partners (IPs) is based on transparent criteria agreed by the Government and the Agencies.
Generally, 80% of the budget is expected to be allocated to the regions and the remaining 20% to
the Federal IPs (including Addis Ababa City Administration). Of the total allocation to the
regions, 80% to be allocated to Woreda and the remaining 20% to be allocated to regional
bureaus for program monitoring and evaluation related activities, , (Program implimentation
Mannual Ethiopian, 2013)
5
1.2. Statement of the Problem
In almost all of sub-Saharan Africa there is a high degree of indebtedness, high unemployment,
absolute poverty and poor economic performance. The average per capita income in the province
has fallen since 1970 despite the high aid flows. Utilization of donor funds had been a challenge
to both the donor community as well as the agencies that are responsible for utilization of the
same. Therefore, there is need for institutions that are responsible for the management of these
funds to come up with the right framework and procedures in order to ensure that funds given are
utilized as expected and that the funds serve the purpose. (Fowler, 1995) (Easterly, 2003) argued
“despite large amounts of foreign aid-and several countries that were able to utilize foreign
assistance in their development and poverty-alleviation strategies, the effectiveness of foreign aid
remains in doubt”. Several surveys of the evidence conclude that aid has not led to increased
growth and may have even worsened the economic performance of the countries receiving aid
(Adedeji, 2001); (weder, 2002); (Alesina A, 2002) . (Round JI, Odedokun MO , 2003).
Donor fund effectiveness remains a top priority for the international development community.
According to, (Acharya A, 2003) whether tackling the global millennium Development Goals
(MDGs) or working collaboratively on poverty reduction strategies at the country level, donor
agencies must improve their effectiveness to achieve concrete development outcomes and
eliminate poverty. (Easterly, 2003) argued that in looking at the history of aid, one might wonder
if Official Development Assistance (ODA) is truly meant to promote economic growth and
reduce poverty. (Mosley P, Eeckhout MJ , 2000; marion, 2000) asserted that problems of
economic governance and ineffective utilization of development assistance have ranged from
poor or no consultation with the intended beneficiaries, lack of coordination between various
government agencies, the failure to harmonize policies, programs and procedures harmonization
and alignment, poor project design, to poor monitoring of foreign funded projects and
consequently high degree of indebtedness high unemployment ,absolute poverty and poor
economic performance.
A number of studies done on absorption of donor funds have found that the actual annual
absorption of these funds in many countries has been below fifty percent. If resources in donor-
funded projects are not utilized as planned thereby resulting in low absorption. Studies made by
6
(Kiplag’atK.yater, 2012) on “ Utilization of Donor Funding and its Effects on Economic
Development of the Intended Beneficiaries in Kenya indicates 59% of total projects were not
fully utilized their donor funding during the six year period of the sample. He indicated that
inability to fully utilize funds given as expected will not serve intended beneficiaries. He also
addressed the utilization of different countries and indicated corruption and lack of transparency,
using fund for unintended purpose, funding mismanagement and inefficient disbursement and
underutilization are problems identified in the countries. But this study failed to use an
econometric analysis in showing the effect of donor fund utilization on economic development
of intended beneficiaries even if the study is targeted to show a cause and effect relationship. On
the other hand, the study is limited in accessing the effect of harmonization and technical factors
on donor fund utilization merely using descriptive analysis. Keeping the aforementioned gaps in
mind this study tried to employ additional two variables i.e. financial management factors and
managerial factors as determinants of donor fund utilization by employing econometric analysis
beside descriptive analysis.
Daniel (2015) also undertake a study on the determinants of donor fund utilization in Oromia
regional state by employing both descriptive and econometric analysis using only a primary data.
But the study failed to show the level of donor fund utilization in the region since it does not
account the trend of donor fund utilization within specific period of time. Therefore, the study
failed to account the effectiveness of fund utilization since using merely primary data can not
address the issue the above study was intended to address. In this regard, the current study
employed secondary data concerning the trend of donor fund utilization in line with the primary
data collected through questionnaire. Besides its limitation to account harmonization, the study
of Daniel (2015) also failed to employ appropriate measurement tool concerning the
determinants of donor fund utilization i.e. financial management factor, technical factors and
managerial factors as proposed by UN agencies.
The level of donor fund utilization in Amhara Bureau of Finance and Economic Cooperation
(BoFEC) from 2011 to 2019 indicated an average utilization rate below 70% (Amhara Bureau of
Finance and Economic UN Agency Audit Report, 2019). Therefore keeping the low level of
donor fund utilization within the region and the availability of limited number of studies
concerning donor fund utilization, the currents study was found an interesting area of
7
investigation for the researcher. In general, keeping the above situations in mind the researcher
seeks to examine and provide information about determinants of UN agency fund utilization in
the program implementing sectors in Amhara region.
1.3. Research Questions
The current study is expected to find answer for the following basic research questions
1. What is the starting role of financial management UN agency fund utilization and
Dimension donor funds utilization of Amhara region?
2. Does harmonization of donor have significant effect of UN agency fund utilization?
3. How are the effects of technical factors on UN agency fund utilization?
4. Do managerial factors have significant effect on UNDAF/ UN agency fund utilization?
1.4. Objective of Study
1.4.1. General Objective
To Evaluate the Determinants of donor fund utilization specifically with UN Agency a case
study in Amhara region.
1.4.2. Specific Objectives
The study is guided by the following specific objectives
1. To identify the key roles of financial management on UN agency fund utilization and
dimensions of donor fund utilization.
2. To determine impact of harmonization donor on UN agency fund utilization.
3. To identify the basic challenges of technical factors that effect on UN agency fund
utilization
4. To show power of managerial factors UN Agency fund utilization
1.5. Hypothesis of the Study
The Study was hypothesizing as follows:
H1: Financial management factors have a significant effect on UN Agency fund utilization.
8
H2: Harmonization of UN Agencies has significant effect on UN Agency fund utilization.
H3: Technical factors have substantial effect on UN Agency fund utilization.
H4: Managerial factors have substantial effect on UN Agency fund utilization
1.6. Significance of the Study
The UN Agency and beneficiaries can also benefit by knowing the status and success of utilized
fund from this research paper. The study seeks to raise idea and issues in the hope that various
stakeholder and person directly addressing related to information how to apply the donor fun
utilization, give the basic mechanisms and information that makes interrupting the normal flows
of the business activities. The finding of this study it is hoped had been beneficial to various
stakeholders and aims at shedding light on determinants of UN agency fund utilization. The
study also identifies the factors that mainly determine the UN agency fund utilization and helps
the practitioners, donors and government to take appropriate measurements. It also enables to dig
out how the UN Agencies are working in alignment with the government policy and harmonized
among theme selves at UN Agency in the region.
1.7. Scope of the Study
The study was focused on the donor fund utilization at UN Agency in Ethiopia specifically in
Amhara region.
Generally, this study examined determinants of UN Agency fund utilization in Amhara region.
Therefore, the study is undertaken beneficiaries or implementers of UN Agency program for
instance Health office, Education office, office of Children &Women Affair, Water Irrigation
and Energy office , nutrition and food security office, Finance and Economic Cooperation office
which are the beneficiary of program funds, including six bureau four zone & nineteen words,
selected by random sampling & list of these samples indicted on appendix 4 Each of the sectors
has its own sub program to implement whereas zone & worda Finance and Economic
Cooperation is not direct implementer it is a coordinator & facilitator. This study is limited to
Amhara region of beneficiaries from UN Agency program, to examine determinants of UN
Agency fund utilization. Therefore, the study discussed the subject in the mentioned
9
implementing sectors of the region fund allocated &utilized from 2011G.C to2019 G.C) and
wouldn’t include issues of the subject matter at national level and in other regions.
1.8. Limitation of the Study
This study has its own limitations which are encountered at various stages. The primary
limitation of the study is lack of sufficient material and research done on the study areas. N-
COVID-19 is also a problem for study to conduct interview with appropriate person and other
discussions.
1.9. Organization of the Study
The study is organized in to five chapters, the first chapter deals with introduction of the study
which covers background of the study, funding modality, statement of the problem, objective of
the study, research question, research hypothesis, significance of the study, scope of the study
and limitation of the study. Chapter two deals with the review of related literature and covers
introduction, the term Nongovernmental organization, Development and Growth of NGOs,
Evaluation of the RC system International Response to Aid Effectiveness, Utilization of Aid in
different countries, Dimension of Donor fund utilization, Utilization of Donor funds utilization
conceptual frameworks and research gap of the research Chapter three, deals with the research
methodology which covers introduction the research design, , population, sample size and
sample design, data type and sources, data collection instruments and measurement of variables’,
pilot reliability test of the questioner, measurement of the independent variables, data processing,
Analyses and preparation. Chapter four deals with introduction, respondent characteristics,
descriptive statics’, inferential statics’, correlation analyses ,the relationship between perception
of financial management and utilization of fund, the relationship between perception of
harmonization and utilization of fund, the relationship between perception of technical factor
and utilization of fund , the relationship between perception of managerial factor and utilization
of fund, regression assumption cheeks, regression analysis, hypothesis testing and the last
Chapter five deals with conclusion, recommendation and for policy implication.
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CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1. Introduction
Here, this study presents a review of the literature related to its purpose. The review is organized
according to the specific objectives in order to ensure relevance to the research problem. The
review was under taken in order to eliminate duplication of what has been done and provide a
clear understanding of existing knowledge base in this area. The literature review is based on
authoritative, recent, and original sources such as journals, books, thesis and dissertations. The
literature review also clarifies the variables, gives insights on how they have been studied
previously, the methodologies used, and it leads to the knowledge gap and enables a conceptual
framework to be developed. It also provides the theoretical underpinnings of the study.
2.2. Theoretical Literature Review
2.2.1. The Term Non-Governmental Organizations
The term non-governmental organization was not in general currency before the UN was formed.
When 132 international NGOs decided to co-operate each other in 1910, they did so under the
label, the Union of International Associations. The League of Nations officially referred to its
"liaison with private organizations, while many of these bodies at that time called themselves
international institutes, international unions or simply international organizations. The first draft
of the UN Charter did not make any mention of maintaining co-operation with private bodies.
(Willetts, P. (ed.), 1996)
A variety of groups, mainly but not solely from the United State of America (USA),lobbied to
rectify this at the San Francisco conference which established the UN in 1945.Not only did they
succeed in introducing a provision for strengthening and formalizing the relations with private
organizations previously maintained by the league, they also greatly enhanced the UN's role in
economic and social issues and upgraded the status of the Economic and Social Council
(ECOSOC) to a "principal organ" of the UN, to clarify matters, new terminology was introduced
11
to cover ECOSOCs relationship with two types of international organizations. Under Article 70,
"specialized agencies, established by intergovernmental agreement" could "participate without a
vote in its deliberations. Many diverse types of bodies are now described as being NGOs. There
is no generally accepted definition of an NGO and the term carries different con notations in
different circumstances (Fisher, 1998)
Nevertheless, there are some fundamental features, clearly an NGO must be independent from
the direct control of any government; in addition, there are three other generally accepted
characteristics that exclude particular types of bodies from consideration, an NGO will not be
constituted as a political party; it will be non-profit-making and it will not be a criminal group; In
particular it will be non-violent. These characteristics apply in general usage, because they match
the conditions for recognition by the United Nations.
The boundaries can sometimes be blurred: some NGOs may in practice be closely identified with
a political party; many NGOs generate income from commercial activities, notably consultancy
contracts or sales of publications; and small numbered NGOs may be associated with violent
political protests. An NGO is never constituted as a government bureaucracy, party, a company,
a criminal organization or a guerrilla group.
Thus, an NGO is defined as an independent voluntary association of people acting together on a
continuous basis, for some common purpose, other than achieving government office, making
money or illegal activities (Willetts, P., 2001).
2.2.2. Development and Growth of NGOs
The 1980s saw the onset of what could arguably be described as the golden age of the (INGOs),
the number of INGOs has been growing steeply from the beginning of the 1980s, there were
38,000 NGOs registered as working in more than one country in 1996, more than double the
number of a decade earlier. INGOs are important actors in development policy, and donor
governments have always used them as a tool to carry out aid policies (Catherine, 2006).
Aid is back in the international agenda, after more than a decade of aid fatigue, the international
community envisages substantial increase in aid flow to poor countries in Africa and part of
Latin America and Asia. While generous scaling-up of foreign Aids seem an indispensable
12
condition of reducing poverty and achieving global prosperity history has shown it is not
sufficient (Yontcheva, B., 2003)
The total amount of funds being channeled through has also grown significantly and the
proportion of aid going through NGOs relative to bilateral or multilateral agencies has also
increased. For example, the European union funding for international NGOs in mid- 1970 had a
budget of USD 3.2 million and by 1995 had reached estimated USD 10 million accounting for
somewhere between 15-20% of donor funding. This continuous growth in NGOs has been
attributed to number of reasons such as Technological advancement, cheap air travel and
telecommunications, mobile phone and internet are all said to be making post-cold world a
small-place. Above all there has been increase in disaster related events and therefore the need
for various organizations and even individual to come up with all kinds of NGOs around the
global in the name of raising funds and delivering services to affected communities (Davies,
2008)
However in the last 20 or so years, new actors have emerged on the development sense he
private NGOs, which are channeling an increasing share of development assistance (mostly in
form of donated grants). Their proponents argue that NGOs care about the most vulnerable
populations and represent the voices of the poor. Their motivation is meant to be humanitarian
and not to follow any reasons of the state/ country. As NGOs expand, however they are
increasingly funded by institutional donors and concerns have been voiced about the impact on
donors funding on NGOs behavior. Donors in different parts of the world, particularly the
developed west and Europe contribute trillions of dollars every year towards the activities being
carried by NGOs and other development agencies including the governments. However, does it
mean by contributions such amount of money, they just want to help or there are other
motivational factors? (Nancy, G., and Yontcheva, B. , 2006)
According to (Meyer, Carrie,A., 1995) there has been intensified participation of NGOs in
Oversee a Development Aid (ODA), NGOs have prospered with, as societal revolution
(Salamon, 1994) The number has grown exponentially; the size of some of them make
significant players in social welfare and employment market at National level, funding they
attract has increased enormously and their visibility in general public has been higher.
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The available data from organization for economic co-operation and development (OECD)
indicates that resources channeled through NGOs in all OECD member countries rose from 0.2
percentage of the total bilateral ODA of DAC (development assistance committee) in 1970 to 17
percentage in 1996 to reach, in absolute terms amount equal to twice the total ODA of the United
Kingdom, the DACs sixth largest donor by volume (Woods, A, 2003)
The rise of NGOs and their funding increase is not by an accident, while it reflect private
initiative and private action, it also follow an increase in popularity of NGOs with governments
and other aid agencies and the willingness of donors to make fund available to them. Many of
them have switched from being primarily funded by private donors to being essentially funded
by institutional donors. The reasons of expanding were due to the fact that the official agencies
support NGOs in providing welfare services because of their assumed cost-effectiveness in
reaching the poor. They are also seen as representative of the poor and the most vulnerable; their
relationship with the people is seen as giving them greater public legitimacy than some
government (Meyer, Carrie,A., 1995).
2.2.3. Evolution of the Resident Coordinator System (RC System)
Now a day’s RC system is the product of a lengthy process of institutional evolution whose roots
can be traced back to the early 1950s.its development was never straightforward or linear, but
rather international and adaptive in response to external and internal impulses. Understanding the
origins of RC system officer’s important insights in to current debates.
Thinking a key events in RC system evolution as yardsticks, five phase are mentioned
1. 1950 -1969 (“laying the groundwork”): in 1950, a predecessor institution of the UNDP
started the practice of dispatching field representative aimed at giving partner countries a
stronger voice in aid allocation. ECOSOC accorded these representative a first
coordination mandate in 1960,and their authority was further boosted through a
centralized command over systematic funding .
2. 1969 -1977 (“Growing discontent with the UN development system”): in 1969 the
capacity study of the UN development system resulted in a strengthening of the UNDP
Resident representative as “leader of the team “. On the downside, the autonomy of the
individual entities equally started to grow, and UNDP, s own operational engagement
meant its leadership role was no longer above reproach.
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3. 1977 -1997 (“ a period of stagnation”): 1977 marks the birth of the RC system as a
principally and independent function .while this improved the clarity of coordination
mandate, the subsequent double-hatting of RC and UNDP resident representative
functions resulted in its practical limitation .
4. 1997 – 2006 (“A coming revival?”): the period saw a renewed interest in reform of the
UN development system, including of its mechanisms for aid coordination, benefitting
from a favorable political climate. A 1997 reform package eventually led to the
introduction of the firewall between the functions of UNDP and the RC
5. 2006 – to date (“ delivering as one and rising expectation “) The call for an “empowered
RC “to support the UN development system in “Delivering as one “( Dao) by the High
level panel on system- wide coherence” in 2006 marks another key step in the RC system
evolution ,which led to the piloting of an amended Dao concept. (Bonn, 2013)
2.2.4. International Response to Aid Effectiveness
Aid effectiveness is the efficacy of a development aid in achieving an economic or human
development. Aid agencies are always looking for new ways improve aid effectiveness,
including conditionality, capacity building and support for improved government.
The international aid effectiveness movement began taking shape in the late 1990s donor
government and aid agencies began to realize that their many different approaches and
requirement were imposing huge cost on developing nations and making aid less effective. This
has led donors to begin working with developing countries, to harmonize their work in order to
improve the impacts of aid on economic growth.
The aid effectiveness movement picks up its momentum in 2002 at the International Conference
on financing for Development in Monterrey, Mexico, where the international community agreed
to increase funding for development. It was also acknowledged that money alone was not enough
to reach the desired and planed development goals. Donors and developing countries alike
wanted aid to play its optimum role in helping poor countries to achieve the Millennium
Development Goals (MDGs), which have aimed at halving world poverty by 2015. In 2003, aid
officials and representatives of donor and recipient countries gathered in Rome for the 1st High
Level Forum (HLF) on aid harmonization. At this meeting, which was convened by the
15
Organization for Economic Cooperation and Development (OECD), donor countries committed
themselves to work with developing counties to better coordinate and streamline their activities
at a country level. In 2005, they met again in Paris, and the Paris Declaration on aid effectiveness
introduced more comprehensive packages based on principles of partnership to change the way
donor and developing countries do business together
The Paris Declaration calls for an international, national and local monitoring system to ensure
that donor and recipient government and beneficiaries to work closely together and hold each
other accountable for wrong channeling of development aid .The Paris declaration has five major
dimension that enable both the donor and the recipient government to monitor the effectiveness
of development aid. The five dimensions recommended for the effectiveness of aid areas briefly
described as follow,
A) Ownership: The recipient countries are expected to commit themselves to exercise
effective leadership over their development polices, strategies and coordinate the
development actions with the view of translating these national development strategies
in to prioritized result – oriented operational programmers.
B) Alignment: This stresses that donor agencies should base their overall support activities
on the national development strategies, institution, priorities and police of the recipient
countries.
C) Harmonization: This principle emphasis developing strategies by the donors and
recipient government to harmoniously work together with mutual trust and transparency
to avoid unnecessary duplication of activities and increasing transaction costs.
D) Managing of Results: This focuses on the proper and efficient management of resource
and improving decision making to produce tangible results, that is managing and
implementing aid in a way that focuses on the desired results and use information so
obtained to improve decision making
E) Mutual Accountability: Here the donor and recipient countries are made equally
accountable for development results and they are both required to enhance mutual
accountability and transparency in the use of development resource. (Gurmessa, 2012)
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2.2.5. Dimension of Donor Funds Utilization
2.2.5.1. Financial Management
Financial management is concerned with accounting for and controlling the sources and uses of
the funds that an organization employs in its operation. It aims at providing the needed money in
the most economical way from borrowing owner’s investments or sale. Financial management
regulates the use of the money to produce the greatest output. Management is a process that
decides on the specific goals of an organization and directs the efforts of other people to
accomplish actions needed to meet the goal (Bittel, 1991)
According to, (nickle, 1999) financial management is the handling of public and private resource
so as to meet their goals and objective. Financial management could be in the hands of chief
financial officer, a person who serves as company treasury or vice president of finance .His role
is to obtain money and then control the use of that money effectively. According to (nickle,
1999), financial management is the managing of public and private resources so as to meet their
goals and objectives. Financial management could be in the hands of chief financial officer, a
person who serves as company treasurer or vice president of finance. His function is to obtain
money and then control the use of that money effectively. Financial managers are responsible for
collecting overdue payment and making sure that the organization does not lose too much money
to bad debts (people or organizations that do not pay). Financial planning and control are aspects
of financial management. Financial planning involves analyzing short-term and long term money
flows to and from the organization. The overall objective of financial planning is to optimize the
organization’s profitability and make the best use of its money. Financial control is the process in
which a firm periodically compares its actual revenues, costs and expenses with its projected
ones. Most companies or organizations hold at least monthly financial review as a way to ensure
financial control.
Financial management consist of all the activities concerned with obtaining money and using it
effectively .Effective financial management involves carefully planning and efficient use of
resource. Proper financial management can ensure that financials priorities are established in
line with organization goals and objective, spending is planning and efficient use of resource.
17
Proper financial management can ensure that financial establish priorities and sufficient
financing is available when its needed (Pride, Hughes and Kapoor, 2002)).
Good financial management reduces government and private expenditure by ensuring that the
services needed by the citizens especially the poor are actually delivered, maintained and worked
properly. It ensures accountability to citizens for the use of public resources. Public financial
management is an attempt made by government to ensure that consistently the budget is either a
balanced or a surplus budget. These are largely achieved through ensuring adequate receipts
from taxes and non-taxes sources and reducing public expenditure levels. These are done through
the assessment of expenditure policies, revenue drive or revenue diversification and tax reforms
among others (world bank report, 2001). The key objectives of financial management are to
create wealth for the organization, generate cash and provide an adequate return on investment.
According to (Ebert, 1999) financial managers must ensure that their organizations have enough
funds on hand to purchase the materials and human resources that they need to produce goods
and services.
According to financial management for nonprofits, budgets are tools of the financial
management system used for two central management functions: decision making (planning) and
monitoring and controlling. A budget is a plan of action expressed in financial terms. In the
course of planning, an organization defines its purpose, mission, goals, objectives, strategies and
activities. Through the budget process, decision-makers look at the financial implications of their
plan: how much a program will cost and what are the anticipated revenues. Within the limits of
scarce resources, priorities are set and budgets are created.
2.2.5.2. UN Agency Harmonized Themselves Factor
The Paris Declaration refers to harmonization as a point when “donors’ actions are more
harmonized, transparent and collectively effective.” The Accra Agenda for Action emphasized
that development partners should strengthen country led complementarities and division of labor
between partners. By developing standardized formats for procedures across agencies, partner
countries’ capacities will be able to redirect their efforts to the strategy and implementation of
projects. For the purpose of the Monitoring Survey of the Paris Declaration, indicators 9 and 10
18
measure donors’ use of programs based approaches and joint analysis during joint missions and
joint reviews. (JUTOS, 2010)
The Triennial Comprehensive Policy Review reaffirms the role of the Resident Coordinator in
harmonizing the UN system to enhance coherence, coordination and harmonization. Cost
effectiveness could be improved through the harmonization and simplification of business
practices whereas the number of joint missions, analytical work and evaluations at the country
level could be increased (JUTOS, 2010)
Pursuant to the UN General Assembly Resolution 56/201 on the triennial policy review of
operational activities for development of the United Nations system, UNDP, UNICEF, UNFPA
and WFP (UNDG ExCom Agencies) adopted a common operational framework for transferring
cash to government and non-government Implementing Partners. Its implementation will
significantly reduce transaction costs and lessen the burden that the multiplicity of UN
procedures and rules creates for its partners.
Implementing Partners (IPs) will use common forms and procedures for requesting cash and
reporting on its utilization. Agencies1 will adopt a risk management approach and will select
specific procedures for transferring cash on the basis of the joint assessment of the financial
management capacity of Implementing Partners. They will also agree on and coordinate
activities to maintain assurance over the utilization of the provided cash. Such jointly conducted
assessments and assurance activities will further contribute to the reduction of costs.
The adoption of the harmonized approach is a further step in implementing the Rome
Declaration on Harmonization and Paris Declaration on Aid Effectiveness, which call for a
closer alignment of development aid with national priorities and needs. The approach allows
efforts to focus more on strengthening national capacities for management and accountability,
with a view to gradually shift to utilizing national systems. It will also help Agencies shape their
capacity development interventions and provide support to new aid modalities. (Bhutan, 2012)
The UN Agencies have tried to harmonize the financial management system to the Ethiopia
government system. Among the challenges mentioned by one region was that the requirement to
report finances separately to the agencies, each with information needs was tedious and too
administrative. BoFEC regions make separate quarterly financial reports each for WFP and for
19
UNFPA. WFP financial reporting guidelines are different from the UNFPA guidelines, and
require less detail, while UNFPA asks for more detailed information which BoFED feels should
be handled at the time of audits. To cope with the situation, Amhara for example has allocated
two of its staff, among other duties, to each handle accounts and report on funds from each
Agency. Tigray has one staff member allocated. BoFED still feels that the UN Agencies should
harmonize the reporting requirements and systems so that the BoWAs can make one uniform
report for the two UN Agencies. (lnwb))
2.2.5.3. Technical Factors
Informatics is a connecting discipline that is fundamentally interested in the application of
information, information technology and information systems within organizations. Informatics
is therefore the study of information, information systems and information technology applied to
various phenomena (Beynon-Davies, 2002) Following this definition of informatics, government
informatics can be defined as the application of information, information systems and
information technology within government. This therefore includes application of e-Government
which is “primarily to do with making the delivery of government services more efficient”
(Remenyi, 2005) In support of government informatics, (Tapscott.D , 1995) argues that ICT
causes a “paradigm shift” introducing “the age of network intelligence”, reinventing businesses,
governments and individuals. (V, 2004) quoting Kaufman (1977) observes, “the traditional
bureaucratic paradigm, characterized by internal productive efficiency, functional rationality,
departmentalization, hierarchical control and rule-based management is being replaced by
competitive, knowledge based requirements, such as: flexibility, network organization,
vertical/horizontal integration, innovative entrepreneurship, organizational learning, speed up in
service delivery, and a customer driven strategy, which emphasize coordinated network building,
external collaboration and customer services” all of which are supported by ICT.
Government around the globe have been engaged in the progression of implementation a wide
range of ICT application .countries have classified by the united nations according to their
computer engineering development potential(CEDP) as forward-looking or less developed
(Kual, 1991). Advanced or forward looking includes .for example, the united states, Canada,
West European countries and Japan, less developed includes for example Argentina ,Brazil,
India, Mexico, Kenya and Bulgaria. For all countries, use of ICTs for government reinvention is
20
increasing not only in investment but also in terms of visibility with a number of high profile
initiative taking been launched for the period of 1990s. This reinvention has taken place
particularly in the advanced countries (Heeks R, Davies A, 2000). (Fleming, 2002) Western
countries are convinced that the information society will consequence in economic and social
welfares (Aduen, 2000) The author quoting organization for economic cooperation and
development, notes that information infrastructure are expected to stimulate economic growth,
increase productivity, create jobs, tasks to be easy, time saving quickly update information and
improved on the quality of life.
There is a big difference between ICT implementation and use between developed and
developing countries (Heeks R, Davies A, 2000). However, (Westrup C, 2002) observes that
similarities can also be expected (Westrup C, 2002) These similarities include funds which are
never sufficient, bureaucracy and user needs. The difference is how problems are addressed in
different countries. It can be argued that with their adequate resources and advanced technology,
the Western countries have an easier way of implementing ICT projects than DCs. Most
developing countries are characterized by limited computer applications in the public sector,
inadequate infrastructure and shortage of skilled manpower . (M, 1993) , (M, 1993)notes that
“this situation exists not merely due to lack of financial resources, but largely due to lack of
coordination at different levels in making effective use of the technology”. This uncoordinated
efforts can only result in duplication if each department implements its own ICT projects without
due regard to compatibility within the government. The factors for failure are those occurrences
that constraint proper/smooth implementation of ICT projects in government. These can either be
barriers or inhibitors as described by (Khaled M, 2003), , (Gakunu, 2004) (AinteruhangaM,
2004) (Heeks R, Davies A, 2000), (V, 2004), (BhatnagarS, 2003) and (Zulu, 1994; Saul, 1994).
Barriers can be considered as those occurrences that hinder ICT implementation. Some of these
factors for failure are: infrastructure; (finance; poor data systems and lack of compatibility;
skilled personnel; leadership styles, culture, and bureaucracy; and attitudes. Inhibitors‟ do not
necessarily prevent the implementation of ICT projects but they do prevent advancement and
restrict successful implementation and sustainability. Some of these factors for failure are: user
needs, technology, coordination, ICT policy, transfer of ICT idolizers, and donor push.
21
2.2.5.4. E-Government
E-government has several meanings. One narrow definition focuses only on Internet applications
inside government. However, narrow definition sometimes is expanded to include the use of the
Internet in restructuring government-citizen interactions and related political relationships.
(Farelo, 2006) A broader definition looks at e-government as the use of ICT to strengthen
government performance in areas such as more effective and more efficient provision of
services, opening new channels for people to access government and official information, and
making government more accountable to its citizens. (Kumar, R., & Best, M. L. , 2006) defined
e-Government as the use of information and communication technologies (ICTs) in the public
sector to improve its operations and delivery of services. Government organizations have public
functions that are of general interest to citizens and businesses. While exercising their tasks like
research, policy making, policy execution, democratic control, communication with the citizens,
and internal administrative processes, information emerges.
The (world bank, 2004) defines E-government as the use by government agencies of information
technologies (such as Wide Area Networks, the Internet, and mobile computing) that have the
ability to transform relations with citizens, businesses, and other arms of government. E-
government therefore involves using ICTs to transform both back-end and front-end government
processes and provides services, information and knowledge to the public. It has the potential to
help build better relationships between government and the public by making interaction with
citizens smoother, easier, and more efficient. Indeed, government ministries report using
electronic commerce to improve core ministries operations and deliver information and services
faster, cheaper Wide range of information technologies, such as the Wide Area Networks,
Internet, and Mobile Computing, are used by e-computing to transform government operations
through the ministries in order to improve effectiveness, efficiency, service delivery and to
promote democracy.
2.2.5.5. Information Systems and Its Components
According to, (Laudon, 2012) from a technical perspective, an information system collects,
stores, and disseminates information from an organization’s environment and internal operations
to support organizational functions and decision making, communication, coordination, control,
22
analysis, and visualization. Information systems transform raw data into useful information
through three basic activities: input, processing, and output.
From a business perspective, an information system provides a solution to a problem or
challenge facing a firm and represents a combination of management, organization, and
technology elements.
The management dimension of information systems involves issues such as leadership, strategy,
and management behavior. The technology dimension consists of computer hardware, software,
data management technology, and networking/telecommunications technology (including the
Internet). The organization dimension of information systems involves issues such as the
organization’s hierarchy, functional specialties, business processes, culture, and political interest
groups.
2.2.5.6. Managerial Factors
The extent of success of donor funded projects is determined by managerial capacity of the
human resources of the implementing agencies. (Arndtc, 2000) argued that the officers in the
donor funds projects chain may lack the formal training in foreign aid management, budgeting
and accounting. These weak skills may lead to poor understanding of the donor expenditure
protocols resulting in ineligible expenditures, which lead to rejection for further funding by the
donor. This may be affected by the quality and timeliness of the liquidation documents which
complicate the donor fund release, with obvious implications on levels of donor aid
effectiveness. From a skill development perspective, (Nancy, G., and Yontcheva, B. , 2006) have
reported on a complementary relationship between education and ICT in the analysis of the
Human Development Index (HDI), particularly in Africa, and conclude that ICT and education
have a positive impact on development. One worrying trend to note (Nancy, G., and Yontcheva,
B. , 2006) has been the consistent low ranking of African nations. The (Human Develoment
report , 2003)warned that Africa in general may be facing “an acute development crisis” with
many African countries suffering serious socio-economical reversals. HDI in Africa cannot
therefore afford to take a “business as usual” approach. (Hawkins, 2002) Contends that Africa
needs to have workers who learn how to learn, and are able to quickly acquire new ICT skills.
23
Poverty and low levels of ICT capital investment in East Africa by public and private sectors and
the absence of fully trained local citizens in ICTs explains the economic disparities between East
African states and Southern Africa (Ochilo OP, 1999) The appropriate use of ICT does “give
civil society an opportunity to formulate new forms of activism and participation in democracy”
(Fleming, 2002) Human capacity projects in Kenya have taken various forms. At Moi University
in Kenya, a collaborative project with Delft University of Technology in the Netherlands helped
in raising computer awareness and trained staff in management of information systems and
project management (Mutula S M, 2003).
Studies suggest inadequate ICT skills training in eastern Africa and reveal that a total of 57.8%
of professionals coming out of institutions of higher learning rated their institutions as being
“less professionally capable of dealing fully with ICT training needs” with only “28.1% of the
professionals rating the institutions as capable”. Of concern here is the content and curriculum of
these institutions which has been noted as inadequate to fully cater for the emerging ICT African
professional in terms of robust training program including data processing, systems management,
and advanced computer training. The situation is exacerbated by the lack of “effective
dissemination of information” and an “excessive dose of theoretical courses not fully blended
with the practical courses that fail to cover the contemporary ICT international issues” (Ochilo
OP, 1999). Contrasting the above African phenomena with (Wesselse, 2003) account of
developed countries shows the magnitude of seriousness placed on the ICT competency by
skilled professionals in other parts of the world. This view is supported by (Hostrom GL, Hunton
JE, 1998) who argued that professional educators and their students must either develop high
levels of information technology competence or risk becoming functionally obsolete. It can be
inferred from this argument that HDIs can become functionally obsolete by proxy.
2.2.6. Agency theory
Agency theory was first proposed by Stephen Ross and Mitnick and further developed by
Jensen and (Jensen,M.and Meckling .W., 1976) (Mitnick, 2013). Agency theory addresses the
relationship where in contract one or more persons (the principal engage another person (the
agent) to perform some service on their behalf which involves delegating some decision making
authority to the agent. Agency theory is concerned with resolving problems that can exist in
24
agency relationships, that is between principal such as shareholders and agent of the principal for
example, company executive.
Agency theory Address the problem that raise when the desires or goals of the principal and
agent are in conflict and the principal is unable to verify what agent is actually doing and the
problems that arise when the principal and agent have different attitudes towards risk. Because of
different risk tolerances, the principal and agent may each be inclined to take different actions.
According to (Walker, 2003) the agency model theory is anchored on the fact that information
asymmetries and pursuant of self-interest, principals lacks basis to trust their appointed agent and
will seek to mitigate these concerns by putting in place mechanisms to align the interest of agent
with principals and to reduce the scope for information asymmetries and opportunistic tendencies
(Keng, Ara, 2013).
2.2.7. Government Failure Theory
It was comprehensively developed by (Weisbrod, 1977) and further in 1988. Government
failure theory can simply be understood as a problem of resource misallocation due to corruption
and it could also be a problem of human capacity Weisbrod states that sometimes governments
are not able to provide the required quantities of service to some sections of the population who
need more than the average provisions. In that case the nonprofit organizations become the
plausible option to fill this demand gap left by the government (Valentine, 2006)
2.3. Empirical Literature Review
2.3.1. Utilization of Aid in Different Countries
In 1994 health care service in Bolivia was not universally provided, it is estimated that some 11
percent of the population has no access to health care service, of any kind ,25 percent rely on
traditional machine ,7percent rely on self-medication, and 20 percent use private medicine. This
means that public and NGO sectors together service approximately 37 percent of population
those with least access to health care are the poor who live in rural areas. Resource shortages are
the principal constraint to the provision of service by the public sector .in addition, much of the
decision-making process, including decision about resource allocation and hiring and firing of
personnel is highly politicized. Such problems means that resources are frequently not used
25
efficiently and that personnel are not assigned on the base of good point staffing positions
frequently changes, and, due to labor unions and regulations, incomplete people cannot be
dimsmissed easily. Where donor programs have provided resource to fund public sector
activities, more effective service are provided. Donor-supported program however may create
centers of focused attention and attract human resource from other activities and, in the process,
decrease capacity building prospects for programs that do not have external funds (Grindle,
1994), (Keng, 2014)
The world always response to disasters in every corner of the global with aid, grants and other
assistance: following the tsunami disaster of December 2004 and the subsequence earthquake of
March 2005 in Indonesia areas of Aceh and North Sumarta. According to (Asia Development
Bank/ADB/, No 39127 2009 ) ,ADB contributed a grant of $291 million to Earthquake and
tsunami Emeregency support fund (ETESP) and $ 10 contribution to multi- donor fund both
funded by Asia tsunami fund ,complementary grant of $ 28 and reprogrammed loan of up to $ 33
the fudging were for reconstruction and recovery program of Aceh and North sumrata. The
government of Indonesia;s Agency for rehabilitation and reconstruction (ARR) Was the
executing agency for ETESP until the termination of its 4 years in April 2009, when the national
planning agency assumed this role. However, by 2008, the government was still addressing the
underutilization of annual budget due to poor performance by contractors and logistical
challenges that arose in remote areas such as Nias and simeulue Island. In addition to additions
to previous years, ARR was unable to expedite the annual appointment or reappointment of
implementing units; this disrupted the transition from one unit to another. The original goal of
completing the project in (by the end of 2008) three years proved optimistic (ABD, 2009 a)
Sri Lanka, like many developing countries ,has been grappling with problems of underutilization
of aid 29 the rate of aid utilization ( measured by the disbursement ratio disbursed aid as share
of cumulated undisbursed aid ) indicated a relatively low utilization of aid of around 13-15
percent towards the end of the 1999s institute for policy studies (IPS) ( 2001),By 2003 ,there was
a gradual improvement in the Utilization rate to a more respectable disbursement ration of
around 20-22 per cent ,though the cumulative undisbursed balance (CUB) has remained
stubbornly in the region of US $2.5-3 billion( ABD 2900b
26
The NGO sector in Zimbabwe is notably disorganized and fragmented, the umbrella body,
NANGO, no longer functions in any meaning full way, and had long lost credibility in the eyes
of both donors and members. NANGOs, failure to grapple with the private voluntary
organization (PVO) Act merely deepened its crisis .NANGO;s problems were exposed to public
security in mid 1996, after five members of the Northern region committee (including Harare)
resigned citing a lack of transparency . All five prominent member of the NGO community and
two also played important roles on NgNGOs national executive donors have complained that
NANGO also lacked transparency and was using project funds for administrative purpose.
NANGO also faced in crippling deficit of ZWD $ million, owed substantial backs of staff, and
was in needs of new premises for its head office (Rich, S., 1997)
In Gahana in 2007 NGOs were told be sincere in the utilization of funds for projects and not use
nonexistent communities to raise funds for their personal use. DR seid Al- Hassan said there was
a mixed feeling about the contribution of NGOs to the accelerated economic growth and poverty
reduction of beneficiary countries particularly, the developing nation, where poverty was
endemic. Dr Al-Hassan noted that while some of the NGOs were doing well in terms of fund
utilization, others were using their organizations as means and source of employment instead of
applying the funds intended purpose .He called on NGOs to build strong collaboration with one
another, as well as an effective collaboration and harmonization with the public sector for
development, efficiency and sustainability (Atta, 2007).
The recent bank of Zimibabwe (RBZ) has also come under fire for diverting funds, US$ 7.3
million meant for diseased programs. Irate activists have said the bank’s actions were
unforgivable; and put HIV-positive Zimbabwean’s live at risk, in a time when they are the most
in need. President of Zimbabwe HIV& AIDS Activists union, BerbardNayhi, stressed that the
global funds should no- longer channel donor funding through government. The fund has since
stated that money provided to Zimbabwe will be dependent on future behaviors and agreement
specifically referring to the facts that the funds should be channel without interference from
government. The fund’s Michel Kazatchkine also announced that the organization has placed all
funds under its administration in Zimbabwe under the additional safeguard policy in order to
insure that the money is only used for the specific purpose that was granted for , (Mundell, J.,
2009) South Africa has been founded guilty of different kind of funding mismanagement. In
27
December (2008), it was announced that 13 south Africa HIV &AIDS organizations not receive
their share of the US$3.90 million allocated to them by the Global fund. According to the fund,
the delay was due to the health department’s slow and inefficient disbursing system, even though
the department was repeatedly advised to allocate full- time staff to deal the allocation of funds
.In the Free State to deal with the allocation of funds. In the Free State province of South Africa,
the substandard management of funds led to cost containment measures; meaning that 31
hospitals were forced to postpone emergency surgery and refuse new AIDS patients for
Antiretroviral (ARV) treatment. In 2008 Uganda experienced significant cuts in funding,
specifically from the Global fund, largely due to the suspension that the fund that the fund
imposed on Uganda more than three years ago ,for mismanagement of grants, the suspension
occurred in August 2005, following a Global fund audit that indicated that the ministry of health
had misused us$1.6 million . (Mundell, J., 2009)
In 2008/2009 the total funding for HIV/AIDS in Kenya amounted to $87 million, these funding
came from a range of donors, the most significant one was government. In financial years 2009
from the US president’s emergency plan for AIDS relief (PEPFDR) amounted to $541.5 .The
Global fund was the second largest contributor to HIV/AIDS funding in Kenya, having
contributed $87 million in total .The utilization of these funds corruptions and lacks of
transparency of the distribution of the funds were the major ones, and therefore resulting in the
funds not being utilized within the agreed duration between the Kenya government ,selected
NGOs for the implementation of the project and the donors. In 2009 kenya was ranked in the
bottom third of countries worldwide for corruption. The same issues affected the influx of
funding in 2003, 2008 and 2009, and it had to Global fund delaying and refusing application for
funding in Kenya (UNAIDS, 2010)
2.3.2. Determinants of Fund Utilization by NGO’s
(James, 2010) carried out a study on the relationship between government and non-government
institutions (Lain, 1999) investigate the role of NGOs in the countries development and found
that improved role of NGO in the process of development is their expected efficiency and
effectiveness in their programs and service delivery to meet the needs of poor and vulnerable
people in the society which results failure of the government, the private sector and international
efforts to promote development.
28
(Ownens, 2010) Carried out a study to determine the performance of NGOs in Unanda This
study found that NGOS have poorly performed due to lacks of transparency.
(Owens, 2002) on their study to determine the effect of aid programs in donor dominance areas
in Nepal’s found that without strong relationship with national or governmental institutions the
sustainability and implementation of many projects and programs is very uncertain which is a
key threat to continued flow of international development assistance (WilliamE, 2006) carried
out a study on the effect of credit organization in Uganda which focused on poor and
discriminated women who are considered risky and treat of future access to credit .the finding
revealed that NOGs assistance does not reach the poor or the bottom end people in the society
who needs these resource because the number reached is very insignificant.
(Mary, 2008) carried out a study on the impacts of global civil on economic processes .the
findings shows that aid money can lead to formulation of artificial NGOs which roots out
genuine NGOs projects and program which in turn contributes to increase corruption,
demonstrations and criminal groups .
(McGillivary, 2003,2006) Argued that poverty eradication and implementation of policies from
different and major bilateral donors has improved to date, which leaves a lot to be desired .NGOs
popularity aid is due to the failure of official project and programs developed to reach and assist
the poor (Robinson, 1995) .
(Hulme, 1996) on their study on NGOs involvement in the development process found that
NGOs strongly connected to the government in association that are both ambivalent and dynamic
and sometimes simultaneously which influence NGOs choice of aid recipient through their
projects and programs based on location, language and religion
2.4. Conceptual Framework of Study
According (Mugenda O.M &Mugenda A.G, 2003), a conceptual framework helps reader to
quickly see proposed relationships between variables in the study and show the same graphically
or diagrammatically. In this study, financial management, UN Agency harmonized with
themselves, managerial factor and technical factor influence the dependent variable of utilization
of UN Agency funds. Therefore, the study was focus on the impacts of variables i.e.
29
Dependent variable: - utilization of donor fund was considered dependent variable, It
affected by the following factors among others
1. Technical Factor: which comprise appropriate technology, adequate infrastructure and
equipment to support new technology, skilled personnel in ICT adequate coordination at
different level.
2. Managerial Factors: which comprise managerial capacity of human resource of the
implementation agencies formal training in foreign aid management budgeting and
accounting by donor funds project officer quality and timelines of liquidation documents
which complete the donor fund release, and supportive leading style and culture.
3. Financial Management Factors: This dimension comprises of accounting system,
accounting practices budget and donor regulation.
4. Harmonization Factor: comprise close Aliment of development aid with national
priorities and needs
30
Independent variable dependent variable
Source: Modified from (Francis, 2013)
Technical Factors
✓ Appropriate Technology ✓ Adequate infrastructure and equipment to
support to support new technologies ✓ Skilled personnel in ICT ✓ Adequate coordination at different levels in
making effective use of the technology ✓ Quality data systems and lack of
compatibility, ✓ Support Ict policy
Managerial factors ✓ Managerial capacity of the resource of the
implementing agencies ✓ Formal training aid management ,budgeting
and accounting by donor funding project officers
✓ Quality and timelines of the liquidation documents complicate the donor fund release
✓ Supportive leading styles and culture
Harmonization factor
✓ Alignment of reporting system
✓ Accountability
✓ Disbursement of donor funds
reliability& timly
Financial management factor
✓ Accounting system
✓ Accounting practices
✓ Budgets
✓ Agency regulation
UN Agency
or UNDAF
fund
utilization
31
2.5. Research Gap
In my insight in the country level the other researcher didn't look result-based evaluation of
donor fund or grants corresponding with the country priority for the initiative national
and regional government to be generalized. The overall donor fund evaluation explicitly
that insufficient information, well organized data and material, literature are not
explored. The size, types, location of research done was inadequate. Even if increasing
of the amount of fund utilization is very crucial but some of research done in our
country at effortlessness research study did not fully integrated and content of variable
are not more than three variables the factor that affect the fund utilization. I didn’t get a
much more a study conduct aid effectiveness in generally, at UN Agency fund
utilization in particular.
32
CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Introduction
This chapter presents the methodology was used to collect and analyze the data required to
describe the participants and answer the research questions. The discussion may include the
research design, population/sample, source and method of data collection, variables of the study,
instrumentation, measurement of variables, reliability test, pilot test reliability Cronbach alpha
test and data analysis according to the objectives and hypothesis of the study.
Quantitative research approaches and descriptive type of research design is selected as it
produces quantitative information about the social world and analyze several variables
simultaneously (Babbie, 1986, Neuman, 1994).The descriptive research design aimed at
investigating the methods of allocating and utilizing funds that permit NGOs to be moved rapidly
to appropriate point of the association network, which improved to responds adequately to
emerging catastrophe.
The research design that employed in this study was quantitative nature of the survey type and it
attempt to examine the various determinant factors (Financial Management Factors,
Harmonization Factor, Managerial factor, Technical Factors) that can affect UN Agency fund
utilization in Amhara region. The Correlation and Regression approaches were used to
investigate the relationships between the variables of the study in a causal system by avoiding
bias, summarization of large information and testability of the hypothesis. This is because the
objective is to examine the relationship between these variables.
3.2. Population Sample Size and Sample Design
3.2.1. Study Area and Population
The study was conducted in Amhara region of the implementing sectors i.e health office, basic
education, women young and child office, Finance and economic cooperative office, water,
irrigation and energy, Agriculture office.
33
The target of the population were from procurement, finance and property administration,
external resource mobilization, planning and budging team, internal audit department. The total
number of population 224 respondents. To obtain the required sample size from the study
adopted the formula proposed by, (Yamane.T, 1967) and (Israel, 2009)
𝑛 = 𝑁
1 + 𝑁(𝑒2)
Where N= Total population underconsideration in case of 224 respondent
e = level of signifanct at .05 or 5%
substitutin in equation above ,obtained n = 143.5 ≈144 and add 5% of sample size equals 150
respondent.The sample size was larger than 30% and hence amenable to most methods of
statistical annalysis.30% of sample size is a fair number and would hopefully yield fair results
and recognized as being representative of the entire population (Mugenda O.M &Mugenda A.G,
2003). (KothariC.R, 2006)
In Amhara region government structure all implementing Bureaus are their own procurement,
finance & property administration, external resource mobilization /planning & budgeting team
and internal audit departments whereas in zone and woreda level implementers using pool
system of zone finance& economic cooperation and woreda finance & economic cooperation
respectively.
According to (Hayer, 1997), it was a statistical determination of the appropriate sample size and
it enabled the researcher to generalize results to the population. Stratified sampling eliminates the
possibility of biasness in the selection of a sample under investigation.
The population chosen has no homogeneous characteristics. Hence, the sample of respondents
was determined using stratified sampling which relies on mere chance to determine who would
be selected in the sample. The populations were stratified into team or crews based on their
special technical skills as finance, procurement and property administration team, external
resource mobilization (planning & budgeting) team and internal audit team or crews. After
stratification as finance, procurement and property administration, external resource mobilization
34
or government cooperation /planning & budgeting team and internal audit team, the
questionnaires were administered to all crews or teams, and simple random sampling
technique/lottery method was used for all teams in whom every single element in the population
has a known and equal chance of being selected as a subject. To sum, a combination of sampling
techniques of purposive sampling, stratified sampling and random sampling was used to select
sample fund users.
Table 3.1: Sample Size
S. No.
Strata
Sample
frame
Sample
size
1 Health sector 46 33
Procurement, finance & property team 28 22
External resource mobilization /planning & budgeting team 10 6
Internal audit team 8 5
2 Finance and Economic cooperative 96 58
Procurement, Finance & property team 56 33
External resource mobilization /planning & Budgeting team 26 16
Internal audit team 14 7
3 Women and Children Affair sectors 24 17
Procurement, finance & property team 14 8
External resource mobilization /planning & budgeting team 6 7
Internal audit team 4 2
4 Agriculture, sector 10 7
Procurement, finance & property team 6 4
External resource mobilization /planning & budgeting team 2 2
Internal audit team 2 1
5 water, Irrigation and Energy sectors 30 21
Procurement, Finance & property team 16 11
External resource mobilization /planning & Budgeting team 10 7
Internal audit team 4 3
6 Basic Education Sectors 18 14
Procurement, finance & property team 8 7
External resource mobilization /planning & budgeting team 6 4
Internal audit team 4 3
Total 224 150
Source: UN Agency Implementing Sector Human Resource Department, 2020
35
3.3. Data Type and Source
In order to gather relevant information, possible methods were selected for both primary and
secondary data. The relevant primary data were collected from the respondent (Un Agency fund
user sectors) through questionnaires. The Secondary data such as annual work plan, program
implementation manual /PIM/ records manuals, yearly financial statements, annual report
(audited) and books for budget utilization was reviewed and used for triangulation purpose.
The primary data had been collected from sample mean for the purpose of the study by using
preferable for this study because it was the information gathering directly from the respondents
thus it’s precise and has highest degree of accuracy. The data was collected using clos ended
questioner, questionnaires were distributed through email to the respondent to self-fill and return
through email.
3.4. Data Collection Instrument and Measurement of Variable
For this study, the researcher uses a questionnaire as best data collecting tool. Primarily data was
obtain from selected Un agency fund user sectors in the region using self-administered
questionnaires, being as best data collecting tool .This is so because questionnaire is the least
expensive, time saving and encourages the respondent to fill their feeling which consisting of
close ended questions These close ended questionnaire developed by (Asrat, 2015);
(Kiplag’atK.yater, 2012); (Gurmessa, 2012), (Gurmessa, 2012) (Francis, 2013) (Kothari, C.R.,
2004) in the same title. The researcher adopted standardized instrument from previous studies
which all of this study had reported an acceptable reliability of the instrument. To ensure the
practical applicability of the instrument in the study area the researcher made some few word
modifications for instrument for simplicity of understanding of term of the adopted instrument
and check the reliability & validity of the instrument.
The research instrument are comprises of instrument statements designed to measure the variable
of the study using Five -point Likert scale(1= Strongly Disagree,2=Disagree,3=Neutral,4=Agree,
&5=strongly agree).The questionnaire is divided in to two sections the first part is about
demographic characteristics of respondents and the second part is content of the study.
36
3.5. Method of Data Analysis
The raw data concerning donor fund utilization was collected using questionnaire and the
secondary data was collected through document review. The data were processed with the help
of STATA13 statistical software. Descriptive statistics approach was adopted for interpreting and
presenting the data in this research since this approach enabled the researcher meaningfully
describe the distribution of scores using different statistical measures (Mugenda, 2008).
3.5.1. Descriptive Analysis
Descriptive statistics indexes like mean and standard deviation were used for analysis in line
with mean comparison t-test and one-way ANOVA tests. A mean comparison t-test were
performed to check the existence of significant difference male and female respondents in terms
of donor fund utilization. On the other hand, the one-way ANOVA test were performed to check
the existence of statistically significant difference or association between demographic
characteristic of respondents having more than two categories with donor fund utilization. In
addition, the summary statistics of the dependent variable i.e. donor fund utilization and the
independent variables i.e. managerial factors, financial management, harmonization among UN
agencies and technical factors. Along the summary statistics a trend analysis was made on the
amount of fund utilization for 9 years. Lastly, a correlation analysis was employed to check the
closeness of the independent variables with the dependent variable.
3.5.2. Econometric Analysis
To address the major objective of the study i.e. “Determinants of Donor Fund Utilization: A
Case of UN Agency Funds in Amhara Region”, an econometric analysis is undertaken by using
multiple linear regression analysis. Regression analysis is concerned with the study of the
relationship between one dependent and one or more independent variables and corresponding
tests (Kothari, 2004). A central point in regression analysis is estimating regression functions
accompanied by some preceding and some succeeding steps in econometric analysis such as
model specification, model diagnostic tests (linearity test, normality test, multicollinearity test,
heteroscedasticity test) and model adequacy test (F-test), model goodness of fit (R square or the
coefficient of determination), individual significance test (t-test). Finally, the econometric
analysis is tied up by a summary of hypothesis testing.
37
3.5.2.1. Model of Specification
The multiple linear regression analysis also used to determine how the predictor variables could
explain the dependent variable. This is because there is more than one variable affecting the
dependent variable. Following (Aserat, 2015), (Kiplag’atK.yater, 2012), (Gurmessa, 2012),
(Francis, 2013), the multiple linear regression model is specified as;
𝑼𝑭 = 𝒇(𝑭𝑴, 𝑯𝑹𝑴, 𝑻𝑭, 𝑴𝑭)
𝑼𝑭𝒊 = 𝜷𝟎 + 𝜷𝟏𝑭𝑴𝒊 + 𝜷𝟐𝑯𝑹𝑴𝒊 + 𝜷𝟑𝑻𝑭𝒊 + 𝜷𝟒𝑴𝑭𝒊 + 𝜺𝒊
Where, FM = Financial Management
HRM = Harmonization among UN Agency
TF = Technical Factor
MF = Managerial Factor
β0, β1, β2, β3, 𝑎𝑛𝑑 β4 are unknown population parameters.
𝜺 = error term
i = 1, 2, 3, . . ., 150
3.5.2.2. Description of Variables
Dependent Variable
Donor Fund Utilization
On the other hand measuring the dependent variables of the study (UN Agency fund utilization)
A total of Eight closed ended items were adopted from different researchers (Aserat, 2015);
(Kiplag’atK.yater, 2012), (Gurmessa, 2012), (Francis, 2013) and independent variable described
above to measure the variables of the study using five-point Likert Scale (1 = strongly disagree,
2 = Disagree, 3 = Neutral, 4= agree and 5 = strongly agree). Thus, the respondents were
requested to select their own choice of the five-point Likert scale alternatives in order to specify
their level of agreement or disagreement on each statement.
Independent variables
38
The independent variable which have a relationship with the UN Agency is consider in this paper
are perception of financial management, harmonization among the Un agency ,technical factor,
managerial factor monitoring and evaluation factor and their measurement is mostly developed
and adopted from different , questionnaire point of view (Aserat, 2015), (Kiplag’atK.yater,
2012), (Gurmessa, 2012), (Francis, 2013) are discussed as follows:
• Financial Management was measured based on the nineteen-item scale questionnaire
which attempts to assess the respondent’s contribution, influence and effect on the overall
UN Agency fund utilization. One of the sample items which justify this statement in the
scale is “Financial duties are split between different members of staff. The response scale
is a five-point Likert-type scale ranging from one (strongly disagree) to five (strongly
agree).
• Harmonization among UN Agencies also measured based on the six-item scale
questionnaire which attempts to assess how Harmonization level of UN Agencies strong
enough in UN Agency fund utilization. One of the sample items which justify this
statement in the scale is: “The reporting format (FACE) used for reporting among UN
Agencies are the same.”
• Technical factor is measured using five item scale developed to determine inadequate
infrastructure affect UN Agencies fund utilization. Out of the sample items which
justify in the scale are: “Adequate infrastructure and equipment to support new
technologies.”
• Managerial factor is measured based on the ten-item scale questionnaire which has an
effect on the UN Agency fund utilization. Out of the sample items which included in the
scale is: “Managers of implementers have adequate knowledge and technical skills. “All
the response of the independent variables scale is a five-point Likert-type scale ranging
from one (strongly disagree) to five (strongly agree).
3.6. Data Validity and Reliability
To measure the internal consistency of the scores analysis is used to test what extent the separate
items the sectors measure the similar concept. In the same way Trochim (2000) stat that
reliability of the tool can be judged by estimating how well the items that reflect the same
39
construct yield similar results (Reliability is the statistical measure of the equivalence,
consistency, and stability of the survey instrument (Sekaran, 2006).In this research the researcher
test Reliability of the data by using Cornbrash’s Alpha because it is the most common measure
of internal consistency. It is most commonly used on multiple Likert-scale questionnaires in a
survey questionnaire to determine if the scale is reliable
Validity is often defined as the extent to which an instrument measures what its significances to
measure. According to Carole et.al (2008) Validity needs that a device is reliable, but a device
can be reliable without being valid’, researcher takes several measures were employed to ensure
that the results are free from material errors from the design of the questionnaire. Such measures
create clarity of instructions, questionnaires, the layout of the questionnaire and other comment
which able to improve the validity of the research.
To confirm whether the adopted instrument is understood or not by the respondent a pilot
reliability test was conducted. A total of 30 questionnaires were distributed to the respondents
the participant for this pilot test was selected from each team or crews based on their special
technical skills based on their easily accessibility to the researcher. Then the returned 30 pilot
questioner were coded and a Cronbach’s Alpha Coefficient test was employed by STATA
version 13. Thus, the STATA output is summarized Table 3.2.
Table 3.2: Pilot Survey Reliability Test
Variables
Freq. No of items Cronbach’s alpha
Financial management 30 19 0.6757
Harmonization 30 6 0.6831
Technical 30 5 0.6685
Managerial 30 10 0.7480
Utilization of funds 30 8 0.8635
Test Scale 0.7802
Source: Own Survey and STATA13 Result, 2020
Generally, a Cronbach’s alpha coefficient of at least .70 is considered sufficient and acceptable
(Hair Black Babin & Anderson, 2010; Nunnally, 1978). The above table 3.3.1 the overall
40
Cronbach’s alpha value of the entire dependent and independent variables of the study achieve
the minimum requirement of reliability analysis (i.e. >0.70). Thus, based on this finding the
researcher concludes that the pilot test of the instrument is reliable to apply in the current study
3.7. Ethical Consideration
The researcher tried to clearly informed and explained to the participants that the data was to be
used only for an academic purpose and were requested to take part in the study with their full
consent in addition that they had the right to withdraw from the study any time whenever they
could not feel at ease. The researcher did not intend to enforce anyone to fill the questionnaire or
to be interviewed as long as (s) he was not willing for the intended purpose and there was no
misrepresentation or distortion of the actual data collected from respondents the researcher also
not personalizes any of the response of the respondents during data presentations, analysis, and
interpretation. Finally, all the materials that were used in this study were dully acknowledged.
41
CHAPTER FOUR
RESULT AND DISCUSSION
4.1. Introduction
This chapter presents all the steps that were involved in order to address the objectives of the
study. The chapter is organized in the following manner. First the chapter explains validity and
reliability of the data that is collected through standardized questionnaire, and then the
demographic profile of the respondents was presented using frequency and percentage in line
with tests such as two sample t-test and one-way ANOVA to check existence of association
between fund utilization and demographic characteristics of respondents. Following the analysis
on demographic characteristics of respondents, a descriptive statistical analysis was carried out
on each explanatory variable i.e. financial management, harmonization, technical factor and
managerial factors that affect fund utilization. After this a trend analysis was made on the
amount of fund utilization for the past 9 years within Amhara region is examined with the help
of graph. In order to further address the major objective of the study, a correlation and regression
analysis were employed. But before the regression analysis was undertaken a multiple linear
regression model diagnostic tests and model summary analysis were made. Lastly the regression
result is interpreted and the research hypothesis that was presented in the very beginning of the
study was tested.
4.2. Response Rate
The target respondent was implanting partners (IPS/ six bureau, four zone and nineteen wordas
(districts) indicated in appendix 4 of UN agency fund user in the region. Accordingly, 150
questionnaires were distributed and all of the question completed and returned. The full response
rate could be attributed to the personal efforts of the researcher, who made a follow up of every
questionnaire.
42
4.3. Data Reliability and Validity
Reliability and validity test were undertaken to check whether the scale used in the study is
internally consistent and consistently measures the variables used in this study i.e. donor fund
utilization, financial management, harmonization among UN agencies, technical factor, and
managerial factors. To check the reliability of the data a test was undertaken using Cronbach’s
alpha.
Table 4.1: Data Reliability Test
Variables Frequency No of Items Cronbach’s Alpha
Financial management 150 19 0.7074
Harmonization 150 6 0.7368
Technical Factors 150 5 0.7237
Managerial Factors 150 10 0.7747
Utilization of Funds 150 8 0.8729
Test Scale 48 0.8093
Source:
Generally, Cronbach alpha of at least 0.70 is considered sufficient of at least 0.70 is considered
sufficient and acceptable (Hair Black, Babin & Anderson, 1978). In the above table, the
Cronbach’s alpha coefficient of the variables involved in this study achieves a minimum
Cronbach’s alpha coefficient of 0.70 and the overall Cronbach alpha coefficient for all items is
0.8093. Therefore, the overall test scale used in this study demonstrates high reliability.
4.4. Demographic Characteristics of Respondents
This section presents information about the demographic characteristics of the respondent in
relation to sex or gender, age, level of education, positions of the respondent and work
experience on responsibility.
43
4.4.1. Sex of the Respondents
Table 4.2: Utilization of Fund by Sex of Respondent
Sex Frequency Percentage Mean Std. Dev. P-value (Two-Sample t-test
Using Group)
Male 96 64.00 3.698 0.779
0.0219** Female 54 36.00 3.421 0.835
Total 150 100.00 3.598 0.808
Note: ** indicates the existence of statistically significant difference between male and female
respondents in terms of utilization of fund at 5% level of significance.
Source: Own Survey and STATA13 Result, 2020
As shown above table 4.2 out of 150 the sampled respondent 96(64%) of them are male and the rest
54(36%) are females, in which males are higher than females. The two-sample t-test that is
undertaken to check the association between fund utilization and sex indicates that sex of the
respondent is statistically significant in explaining the level of fund utilization at 5% level of
significance since p-value = 0.0219.As it can be seen from Table 4.2 men tend to have higher
level of fund utilization as compared to females.
4.4.2. Age of the Respondents
Table 4.3: Utilization of Fund by Age Category of the Respondent
Source: Own Survey and STATA13 Result, 2020
Results in Table 4.3 above shows that majority of the sampled respondents 74(49.33%) were
found within 30-40 years age range followed by respondents whose age is less than or equal to
Age Category Frequency Percentage Mean Std. Dev. P-value (One-way
ANOVA Test)
<=29 Years 44 29.33 3.588 0.894
0.4442
30 – 40 Years 74 49.33 3.519 0.822
41 – 50 Years 26 17.33 3.784 0.644
>50 Years 6 4.01 3.854 0.544
Total 150 100.00 3.598 0.808
44
29 years accounting 44(29.33%) of the sampled respondents, the remaining sample respondents
accounting 26(17.33%) and 6(4.01%) found within the age range of 41-50 years and greater than
50 years respectively. Even though the test result using one-way ANOVA shows no statistically
significant relationship existed between age and fund utilization, it is generally understood that
on average fund utilization increases linearly with age as it can be observed from the above table.
As per the data the likelihood of fund utilization is higher for older employees as compared to
younger employees. This infers that employees who are more experienced in their jobs are
highly curious in fund utilization than those who are less experienced since experience of
employees is highly associated with their age. This is because older employees may have jobs
that use their skills better, work under better job conditions, benefit from advancements and
promotions, and appreciate fringe benefits more than younger, less experienced employees as
such this in turn raise the likelihood of fund utilization among aged employees.
4.4.3. Education Level of the Respondents
Table 4.4. Utilization of Fund by Education Status of the Respondent
Source: Own Survey and STATA13 Result, 2020
Regarding the educational level of the sampled respondents, 21(14.00%) of respondents held
diploma, 119(79.33%) were first degree holders and 10(6.67%) had second degree or masters. In
general, 129(86%) of the respondents is held degree and above. The one-way ANOVA test result
shows that there is no significant difference among different education status levels in terms of
fund utilization at 5% level of significance since p-value= 0.2345. There was also no evidence in
this study to indicate a statistically significant relationship between educational level and fund
utilization when the responses of the respondents at Amhara region UN agency fund users were
compared. The statistical analysis may, however, have been biased due to the unequal sizes of
Education Status Freq. Percentage Mean Std. Dev. P-value (One-way
ANOVA Test)
Diploma and Below 21 14.00 3.857 0.775
0.2345 First Degree 119 79.33 3.543 0.824
Second Degree and Above 10 6.67 3.713 0.607
Total 150 100.00 3.598 0.808
45
the groups since about 79% of the sampled respondents were first degree holders, and the
remaining 21% sampled respondents acquire diploma and master’s education level.
Even though, the study does not show a positive correlation between fund utilization and
educational level obviously it is known that employees with higher education level have more
opportunities for work that they find stimulating and they can use skills which are more
challenging and creative. Additionally, education may have a slight negative relationship with
fund utilization; the higher the level of formal education, the more likely an employee is to be
more dissatisfied with the job and become somehow reluctant in undertaking his/her work
appropriately and this in turn may lead to a fall in allocated fund utilization.
4.4.4. Job Position (Responsibility) of the Respondents
Table 4.5: Utilization of Fund by Position of the Respondent
Source: Own Survey and STATA13 Result, 2020
The result from Table 4.5 indicates that the majority of the respondents 58(38.67%) were finance
officers, 40(26.67%) purchasing finance & property process owner, 22(14.67%) Internal Audit
officer, 17(11.33%) external resources mobilization officer/government cooperation and the rest
13(8.67%) planning &budging process owner. In general, the day to day operators of UN
agencies funds. Mean that Finance officers, purchase finance and property process owner and
external resource mobilization (government cooperation) account 115(76.67%) of the sampled
respondent implying that the data collected from them is more reliable and valid. The one-way
ANOVA test result shows that there is no significant difference among different job title
(positions) in terms of fund utilization at 5% level of significance since p-value= 0.1157.
Position or Job Responsibility Freq. Perc. Mean Std. Dev. P-value (One-way
ANOVA Test)
Finance Officer 58 38.67 3.795 0.722
0.1157
Government Cooperation Officer 17 11.33 3.551 0.841
Internal Audit Officer 22 14.67 3.358 0.854
Purchase and Property Process Owner 40 26.67 3.431 0.860
Planning and Budget Process Owner 13 8.67 3.702 0.775
Total 150 100.00 3.598 0.808
46
4.4.5. Experience of the Respondents
Table 4.6: Utilization of Fund by Work Experience Category of the Respondent
Note: ** indicates the existence of statistically significant difference between different work
experience category of respondents in terms of utilization of fund at 5% level of significance.
Source: Own Survey and STATA13 Result, 2020
As the above table indicates with regards to work experience 57(38%) of the respondents serve
less than or equals to 5 year while 43(28.67%) 6-10 years, 26(17.33%) 11-15 years,
15(3.84%)16-20 years and the rest 9(6%) greater than 20 years of experience. In the UN agency
programs experience is more considerable. The one-way ANOVA test result shows that there is a
statistically significant work experience of employees and fund utilization at 5% level of
significance since p-value= 0. 0451. Employees with longer service may experience efficient
level of fund utilization because the job matches their personal needs. In this regard, employees
with long work experience tend to adjust their work values to the conditions of the workplace,
resulting in efficient fund utilization. After a few years on the job, efficiency in doing jobs is
common and efficiency in fund utilization too.
Work Experience
Category
Freq. Percentage Mean Std. Dev. P-value (One-way
ANOVA Test)
<=5 Years 57 38.00 3.291 1.086
0.0451**
6 – 10 Years 43 28.67 3.427 0.672
11 – 15 Years 26 17.33 3.607 0.817
16 – 20 Years 15 10.00 3.837 0.933
>20 Years 9 6.00 3.825 0.621
Total 150 100.00 3.598 0.808
47
4.5. Descriptive Statistics
In this study five variable were considered namely financial management, Harmonization,
Technical factor, Managerial factors and Utilization of funds. Descriptive analysis was directed
on the whole data set for variables in order to understand its nature and types of distribution
(Mean and standard deviation).
Table 4.7: Descriptive Statics of financial management factor
S/N Statement Mean Std. Dev.
1) All financial transactions of UN Agency are properly documented and recorded 3.87 1.08
2) There is an approval system for all transactions by the authorized managers in UN
Agency fund utilization
3.99 1.00
3) There is a chart of accounts used to categorize expenditures in implementing sectors
for all UN Agency program fund.
4.15 0.99
4) The balance in the cashbook is reconciled to the balance on the bank statement every
month for UN Agency bank account
4.00 0.99
5) Financial duties are split between different members of staff 3.76 1.09
6) UN Agencies and government have a 'system of regularly reviewing expenditures
against approved budgets by joint monitoring, technical & string committees.
3.84 1.08
7) The government and UN Agencies are aware that they are responsible for ensuring
strong internal control systems.
3.99 1.00
8) Internal control system is strongly enough for proper fund utilization. 3.57 1.16
9) Any irregularities in financial management are promptly reported 3.74 1.07
10) There is adequate supervision of accounts in UN agency 3.85 1.03
11) FACE Reports are user-friendly for all stakeholders and provide necessary details
and information.
3.67 1.00
12) Reports of previous years are available in the organization 3.81 0.99
13) The procedures & regulations for fund management & Procurement is flexible for
implementation of activities at the given time schedule.
3.54 1.07
14) Program implementation manual (PIM) are adhered to by all implementing sectors. 3.66 1.09
15) The duration provided for implementation of fund released from UN Agencies is
enough to accomplish the program/project activities
3.66 1.23
16) Terms and conditions of sub agreement are adhered to by all the implementing
sector
3.39 1.16
17) Notifications letter for the release of fund from BoFEC or IPS are provided timely. 3.52 1.12
18) Based on Program implementation manual (PIM) all IPS distribute 80% of the
budget to wordas.
3.50 0.95
19) On practical situation direct payment modalities advance payment paid by
government whereas the rest of other amount paid by Agencies these procedure
much Ethiopian government financial rules
3.57 1.07
Total respondent (150*19)= 2850 71.08 20.17
Average 3.74 1.06
Source: Own Survey and STATA13 Result, 2020
48
As shown above in table 4.7 the majority of respondents agrees or does support the statement
and the result revealed scored mean of lie range between 3.54 to 4.15 which means majority of
the respondent agreed the reports. The overall average sum up mean score and of 3.74 and
standard deviation of 1.06, which is strongly agree or agree. This revealed that financial
management factor has strong effect on UN Agencies fund utilization. The study related with
(Pride, Hughes and Kapoor, 2002), it is difficult to achieve the priorities activities when there
are no financial management strategies or guideline. Therefore the donor as well as receipt must
be identify a key performance indicators should incorporate and (OECD, 2005) established
Proper financial management can ensure that financial establish priorities and sufficient
financing is available when it’s needed. From these basically we can say that financial
management factors are tools on fund utilization and activity implementation. They empower
one to see the level of fund usage and activity implementation at any given period, hence the
implementer sector is able to either slow or speed. One can only conclude that either reports are
prepared at end of the project period, when it is too late to be of any use or if they are done
within the project life cycle, they are not used for monitoring and implementation
Table 4.8: Descriptive statics of Harmonization UN Agencies
S/N Statement Mean Std. Dev.
1) UN Agencies are harmonized among themselves establishing
common arrangements, simplifying procedures and sharing
information to avoid duplication
2.50 0.65
2) UN Agencies have established a common joint monitoring and
evaluation system among themselves
3.80 0.94
3) The reporting format (FACE) used for reporting among UN
Agencies are the same.
3.92 0.94
4) Chart of accounts and account codes used for reporting among UN
Agencies are the same
3.84 0.63
5) The time schedule & fiscal year for reporting among UN Agencies
is the same
3.84 0.74
6) Different UN Agencies allocated funds in different activities of a
program (there is no redundancy of activity by Agencies
themselves)
3.31 1.113
Total out of 900 Q(6Q*150) 21.21 5.013
Average 3.53 .8355
Source: Own Survey and STATA13 Result, 2020
49
As shown the above table 4.8 under Harmonization among UN Agency funds variable common
arrangement, procedure and sharing information to avoid duplication has a mean score of 2.5and
standard deviation .065. This indicates that the common arrangement, procedure and avoid
duplication are not employed. On other hand the statement of Harmonization dimension scored
mean ranges of 3.53 to 3.92 which means the majority of respondents agreed on the idea or
statements the entire summed up mean score of 3.53 and standard deviation of 0.8355, which is
strongly agree or agree. This show Harmonization among UN Agency as well as to government
has positive impacts on fund UNDAF fund utilization.
This show Harmonization among UN Agency as used for both donor and receipt government has
positive impacts on fund UNDAF fund utilization. The findings also in line with the study of
(Bhutan, 2012), agencies agreed and coordinate activates to maintain capacity development
interventions and provide support to new aid modalities to assure fund utilization. By this
harmonization is significantly reducing transaction cost and lessen the burden that multiplicity of
UN procedures and rule creates for its partners among the UN Agencies as well as fund receipts.
Table 4.9: Descriptive statics of Technical factors
S/N Statement Mean Std. Dev.
1) Organization used appropriate technology to utilize Agencies
funds (fax, telephone, computers and internet connection)
3.86 1.04
2) Adequate infrastructure and equipment to support new
technologies
3.36 1.13
3) Skilled personnel in information communication technology. 3.48 1.04
4) Strong coordination at different levels in making effective use of
the technology
3.53 .86
5) Data management systems and compatibility are strong 3.56 1.00
Total – out of 750 (5Q *150) 17.79 5.07
Average 3.558 1.014
Source: Own Survey and STATA13 Result, 2020
As it is indicated in the table 4.9 above, organization used appropriate technology, adequate
infrastructure to support new technology, skilled personnel in information communication
technology, strong coordination at different levels in making effective use of technology and data
management system and compatibility scored 3.86, 3.36, 3.48, 3.53, and 3.56 respectively. This
means that the respondents are agreed on the idea. Generally, the technical factors the entire
50
summed up of scored mean 3.558 and standard deviation 1.04 revealed that on average
respondent either strongly agree or agree to the issues of technical factors and further show
higher impact of technical factor on UNDAF fund utilization. The study is in line with the
finding of Oderada (1993) notes that this situation exist not merely due to lack of coordination
at different level in making effective use of technology, poor infrastructure (finance, poor data
system , lack of compatibility, skilled personnel, leadership style, culture and bureaucracy and
attitude leading to deprived donor fund utilization .This uncoordinated efforts can be results in
duplication of activities. From this we can say technical factors enhanced strong impact on UN
Agencies fund utilization.
Table 4.10: Descriptive of statics of Managerial factor
S/N Statement Mean Std.
Dev.
1) Managerial capacity of the human resources in the implementing
Agencies well perform
3.63 1.13
2) Managers of implementers have adequate knowledge and technical
skills
3.41 1.10
3) Training/refresher trainings are organized for employees to improve
the capacity to undertake necessary duty/functions
3.52 1.19
4) Managers are familiars & understand the donor expenditure protocols
resulting in expenditures are eligible and accepted by donors
3.56 1.17
5) Liquidation documents quality and timeliness are appropriate to UN
Agency fund policies.
3.80 1.04
6) Technical& string committee perform their tasks on the time interval. 3.58 1.14
7) Permanent or contract staffs are assigned permanently for
implementation of UNDAF.
3.58 1.02
8) Strong leadership styles, culture, and absence of bureaucracy. 3.20 1.11
9) Performance measurement (BSC) is used as tool to measure the
performance of employees in implementation of UNDAF programs.
3.54 0.20
10) Government higher officials, Authorities and employees at each
administrative level are committed and accountable for utilization of
fund of UNDAF Program and projects as the government programs &
projects are being done.
3.51 1.16
Total –out of 1500 (10Q *150) 35.33 10.26
Average 3.533 1.026
Source: Own Survey and STATA13 Result, 2020
As one can see from the above table 4.10 the statement scored mean 3.41 to 3.80, which
indicates the majority of the respondent agreed or strongly agreed with the above statements. In
practical viewed as more attention could be given to training in foreign aids management,
51
budgeting and accounting for donor fund project, technical skill, and result based management
(RBM), liquidation document quality and technical and string committee to improve the
managerial factors stated above. The outcomes of finding agree with the study of, (Ouma,
2012)whose findings revealed that donor that were strong on the managerial capacity of
implementing agencies as lack of (or inadequate human resource capacity (Knowledge and
skills) and lack of accountability, poor understanding of donor expenditure, delay liquidation
documents often presented difficult to fund utilization.
Table 4.11: Descriptive statics of Utilization of funds
S/N Statement
Mean Std. Dev.
1 100% of the funds received are utilized for projects and none of
them funds goes for overheads.
3.58 1.19
2 Donor funds are utilized for the purpose it was meant. 3.58 1.14
3 Implementing sectors have managed to complete all projects and
realized the intended impact.
3.38 1.07
4 For purpose of transparency in the way funds were utilized,
implementing sectors prepare donor reports that reflect the true
status of implementation in the sectors.
3.80 1.11
5 Stakeholders involve on` the planning and utilization of the funds. 3.90 1.02
6 The financial accountability for UN Agency fund can be rated as
satisfactory
3.42 1.10
7 Implementing sectors in the region properly account for funds
advanced to them by BoFEC.
3.40 1.19
8 The Federal and regional government and donors have developed
Annual work plans and budgets, setting out how they expect to
achieve the goals agreed in dialogue with others Implementation
plans are likely to be adapted during the course of a project in the
light of feedback and other new circumstances.
3.70 1.13
Total –out of 1200 (8Q *150) 28.76 8.95
Average 3.595 1.1187
Source: Own Survey and STATA13 Result, 2020
Finding of the study a indicates in the Table 4.11 above all variable of fund utilization scored
mean 3.40 t0 3.90.Generellay the fund utilization of UN Agency fund summed up grand mean
3.595 and standard deviation of 1.1187 and the detail result indicated in appendix 4.11 which
52
shows that the majority of respondent either strongly agreed or agree as there was a good UN
Agency fund utilization. Accordingly (Fowler, 1995) ensure this finding the management of
these funds to come up with the right framework and procedures in order to used that funds
given are utilized as expected and funds to the intended purpose. The study also related (Hulme
E. , 1996)all relevant organization must work in harmony if the expected outcomes are to be
achieved. It is clear that there is need for coordination and collaboration among various
stakeholders makes sure that funds received are made use of efficiently and effectively.
53
4.6. Summary Statistics on Continuous Variables
The study employs itemized rating scale to construct a range. This range will be used to measure
the perception level of the respondents towards each variable. The study employs the following
formula to construct the range which is proposed by (Alhariry, 2014) In this regard, Likert scale
response has to be putted on interval of mean, based on the following formula.
𝐶𝑙𝑎𝑠𝑠 𝐼𝑛𝑡𝑒𝑟𝑣𝑎𝑙 =𝑀𝑎𝑥 − 𝑀𝑖𝑛
𝑛1` 𝑤ℎ𝑖𝑐ℎ 𝑚𝑒𝑎𝑛𝑠
5 − 1
5= 0.80
Thus, the mean of each individual item ranging from 1- 5 falls within the following interval:
Interval of Mean Perception
1.00 – 1.80 Strongly Disagree
1.81 – 2.60 Disagree
2.61 – 3.40 Neutral
3.41 – 4.20 Agree
4.21 – 5.00 Strongly Agree
Source: (Alhariry, 2014)
The respondents' average levels of agreement (mean) to the five items are computed for each
variable included in the regression model. The dependent variable i.e. utilization of fund has a
mean collective agreement level is M=3.59which is considered as agree according to the above
interval. The explanatory variables financial management, harmonization, technical factor and
managerial factor have a mean collective agreement above 3.5 which is considered as agree.
The mean value limit set by (Bagheri, 2009)which states that the mean score below 3.39 is
considered low, the mean score from 3.40 up to 3.79 is considered as moderate and the mean
score above 3.8 is considered as high is used to analyze the results.
The summary statistics below in Table 4.12 illustrates the standard deviation and mean
distribution summary statistics on continuous variables which are included in the study. The
resultindicates that all the variables included in the model have a moderate level of agreement as
per the standard set by (Bagheri, 2009)
54
Table 4.12: Summary of Statistics on Continuous Variables
Variable Freq. Mean Std. Dev. Minimum Maximum
Fund Utilization 150 3.59 0.80 1 5
Financial Management 150 3.72 0.65 1 5
Harmonization 150 3.53 0.78 1 5
Technical Factor 150 3.55 0.73 1 5
Managerial Factor 150 3.74 0.60 1 5
Source: Own Survey and STATA13 Result, 2020
4.7. Trend of Fund Utilization
Table 4.13: Trend of Fund Utilization donated by Agency in total
Year Total Fund Total Liquidation Remaining Balance Utilization Rate
2011 235,915,996.19 41,157,431.75 94,758,564.44 59.83%
2012 264,973,092.01 107,125,204.54 57,847,887.47 78.17%
2013 302,014,511.21 220,847,733.48 81,166,777.73 73.12%
2014 285,199,315.67 191,106,099.08 94,093,216.59 67.01%
2015 368,394,403.43 232,900,090.80 135,494,312.63 63.22%
2016 366,551,585.65 286,975,078.37 79,576,507.28 78.29%
2017 260,492,646.46 187,770,009.34 72,722,637.12 72.08%
2018 247,950,662.24 189,896,311.91 58,054,350.33 76.59%
2019 236,582,128.15 189,665,350.06 46,916,778.09 80.17%
Total 2,568,074,341.01 1,647,443,309.33 720,631,031.68
Average 64.15%
Source: Bureau of Finance and Economic UN Agency Audit Report and Author Computation, 2020
55
Figure 4.1: Trend of Fund Utilization
Source: Bureau of Finance and Economic UN Agency Audit Report and STATA13 Result, 2020
Utilization of donor funds had been a challenge to both the donor as well as the agencies that are
responsible for effective utilization of the same. Recipients of donor funds have the
responsibility of ensuring the effective utilization of donor funds but this has not been the case.
Therefore, designing the right framework and procedures in donor fund utilization can have the
capability of ensuring that funds are utilized for their targeted purpose.
With an effective framework and policies governing utilization of donor funds nothing much will
be expected in form of results. All relevant organizations must work in harmony to assure
0
50000000
100000000
150000000
200000000
250000000
300000000
350000000
400000000
2011 2012 2013 2014 2015 2016 2017 2018 2019
Am
ou
nt
of
Fu
nd
in
Bir
r
Year
Total Fund Available for years.Total LiquidationRemaining Balance
56
effective utilization of donor funds. Coordination and collaboration among various stakeholders
are the mere solution to ensure efficient and effect utilization of donor funds.
As can be seen from Table 4.13 above the region performance in utilizing funds donated by
UNDP, UNWOMEN, WFP, UNICEF, UNFPA, ILO, UNESCO, in support of different developmental
for the past nine years (2011 - 2019) indicate an average utilization rate of 64.15% i.e. 35.85% of
the donor fund remain unutilized. The utilization rate indicates the existence of poor donor fund
utilization within the region. When we are viewing both the data in Table 4.13 and the trend of
donor fund utilization in Figure 4.1 above, in the year 2012 the utilization rate of donor fund
increases by 18.34% and follows a down ward trend for three consecutive years i.e. from 2013-
2015. In the year 2016 after showing an increment in utilization rate amounting 78.29%, for the
coming one year’s once again the fund utilization rate falls to 72.08% and increases to 76.59%
and 80.17% for the last two years i.e. 2018 and 2019 respectively.
Concerning the trend of fund utilization (in monetary terms) for the past nine years shows a
dismal trend. For the first three years i.e. 2011-2013, the total liquidation follows an upward
trend by increasing from 41 to 221 million ETB (Ethiopian Birr). After falling to Birr 191
million in the year 2014, for the following two years 2015 and 2016 the amount of fund utilized
increased to birr 188 and 190 million respectively. Then in the year 2017 once again the level of
fund utilization falls to birr 188 million and increases to birr 190 million for the next two years
(2018 and 2019).
Likewise, studies make by (Kiplag’atK.yater, 2012)on “utilization of donor funding and its
Effects on Economic development of the intended Beneficiaries in Kenya indicates 59% of the
total projects were not fully utilized their donor fund during the six-year sample period. He also
addressed the utilization of different countries and indicated that corruption, lack of
transparency, using fund for unintended purpose, funding mismanagement, inefficient
disbursement and underutilization are the main problems resulting poor donor fund utilization in
many countries.
57
4.8. Correlation Analysis
The correlation analysis is used to analysis the data obtained from the respondent the in relation
to variable of the study and is used to analysis the relationship between the dependent and
independent variable of the study.as a statistical tools ,Pearson product- movement correlation is
used to test relationship strength and direction between pairs of variable .According to field
(2006 the output of correlation matrix can be the correlation coefficient that lies between -1 and
+1 within this framework ,a correlation coefficient of +1 indicates a perfect positive relationship,
and a correlation coefficient of -1 indicates a perfect negative relationship. Whereas the
coefficient of 0 indicates no linear relationship. The strength of the correlation is using the guide
that, (Evans, 1996) suggests for the absolute value of r, the interpretation of strength of
correlation coefficient shown in the table.
Table 4.14: Interpretation of Strengthen of Correlation of Coefficient
Value of Correlation Coefficient Correlation Strength
Positive Negative
0.00 to 0.19 -0.19 to -0.00 Very Weak
0.20 to 0.39 -0.39 to -0.20 Weak
0.40 to 0.59 -0.59 to -0.40 Moderate
0.60 to 0.79 -0.79 to -0.60 Strong
0.80 to 1.00 -1.00 to -0.80 Very Strong
Source: (Evans, 1996)
The result in Table 4.15 below shows the existence of strong positive relationship between
perception of financial management and utilization of funds i.e. (r = 0.7002, P-value < 0.01).
Therefore, when the perception of financial management improves, utilization of Fund also
increases and vice versa. This means that financial management system is more moderate and
effective if the utilization of fund increases the reverse is true.
The result in Table 4.15 below shows that a positive but weak relationship between perception
of harmonization among UN agency and Utilization of fund (r = 0.2232, P-value< 0.01).
Therefore, when the perception of Harmonization among UN Agency performed accurately
based on Parise declaration, utilization of fund also increases and vice versa. This means that
58
Harmonization among UN agencies are strong enough to increase utilization of fund and the
reverse is true.
Table 4.15: Pearson’s Correlation Matrixes Correlations
UF FM HRM TF MF
UF
Pearson Correlation 1.000 0.7002* 0.2232* 0.5553* 0.7576*
P-value (2-tailed) 0.000 0.0060 0.000 0.000
N 150 150 150 150 150
FM
Pearson Correlation 0.7002* 1.000 0.1782 0.5070* 0.7083*
P-value (2-tailed) 0.000 0.0291 0.000 0.000
N 150 150 150 150 150
HRM
Pearson Correlation 0.2232* 0.1782** 1.000 0.1294 0.0749
P-value (2-tailed) 0.0060 0.0291 0.1146 0.3621
N 150 150 150 150
TF
Pearson Correlation 0.5553* 0.5070* 0.1294 1.000 0.5770*
P-value (2-tailed) 0.000 0.000 0.1146 0.000
N 150 150 150 150 150
MF
Pearson Correlation 0.7576* 0.7083* 0.0749 0.5770* 1.000
P-value (2-tailed) 0.000 0.000 0.3621 0.000
N 150 150 150 150 150
Where, N = No. of Observation, UF = Utilization of Fund, FM = Financial Management,
HRM = Harmonization among UN Agencies, TF = Technical Factors, MF = Managerial
Factors
Note:* and ** the correlation is significant at 1% and 5% level of significance respectively.
Source: Own Survey and STATA13 Result, 2020
The result in table 4.15 above shows that there is a positive but moderate relationship between
technical factors and utilization of funds (r =0.5553, P-value<0.01). Therefore, adequate
provision of technical factor such as organization used appropriate technology to utilize UN
agencies funds(fax, telephone, computers and internet connection), adequate infrastructure
and equipment to support new technologies and so on leads to effective utilization of Un
agencies fund and vice versa.
59
Table 4.15 above also indicate existence of a strong relationship between managerial factors
and utilization of donor funds(r = 0.7576, P-value < 0.01).Therefore, through improving the
performance of managers in UN agencies fund recipient organizations (sectors) by adopting
various managerial capacity building programs, following strong leadership styles, providing
short term trainings in donor fund utilization and so on, it is possible to raise the level of
donor fund utilization in different public sectors of the region.
4.9. Econometric Analysis
Following the major objective of the study econometric analysis was undertaken. The
econometric analysis was addressed by using a multiple linear regression analysis. But before
interpreting the resulting regression coefficients (parameter estimates) a model diagnostic test
was undertaken. In this regard, the basic assumptions of Classical Linear Regression Models
(CLRM) were checked. Accordingly, normality test, multicollinearity test and heteroscedasticity
test were undertaken. Still before rushing to interpret the regression coefficients and undertaking
a hypothesis testing, the significance of the model was checked by F-test and the significance of
the regression coefficients (parameter estimates) was checked by using t-test. Additionally, the
coefficient of determination was used to determine how much variation of the dependent variable
i.e. donor fund utilization is explained by the variation in financial management, harmonization
among UN agencies, technical factors and managerial factors.
4.9.1. Model Diagnostic Tests
4.9.1.1. Linearity Test
To test the linearity between the dependent variable and the independent variables used in the
multiple linear regression model a distributional plot was made on the standardized residuals to
see the linearity of the residuals. The following graph shows the distribution of the standardized
residuals.
Based on Figure 4.2 below, the standardized residuals were linearly distributed along the
reference line implying donor fund utilization and the explanatory variables were linearly
distributed. Therefore, the dependent and the independent variables are linearly related satisfying
the basic assumption of classical linear regression model.
60
Figure 4.2: Linearity Test
Source: Own Survey and STATA13 Result, 2020
4.9.1.2. Normality Test
Although several tests of normality are discussed in literature, like histogram of residuals;
normal probability plots (NPP) and the Jarque–Bera test. Histogram of residuals is the most
appealing test in many studies. A histogram of residuals is a simple graphic device that is used to
learn something about the shape of the Probability density Function (PDF) of a random variable.
On the horizontal axis, we divide the values of the variable of interest (e.g., OLS residuals) into
suitable intervals, and in each class interval we erect rectangles equal in height to the number of
observations (i.e., frequency) in that class interval. If you mentally superimpose the bell-shaped
normal distribution curve on the histogram, you will get some idea as to whether normal (PDF)
approximation may be appropriate. Therefore, it is always a good practice to plot the histogram
of the residuals as a rough and ready method of testing for the normality assumption.
0.0
00.2
50.5
00.7
51.0
0
No
rma
l F[(
eha
t-m
)/s]
0.00 0.25 0.50 0.75 1.00Empirical P[i] = i/(N+1)
-2-1
01
2
Re
sid
ua
ls
-1 -.5 0 .5 1Inverse Normal
61
Figure 4.2: Normality Plot
Source: Own Survey and STATA13 Result, 2020
The test employed by using histogram of the unstandardized residuals in Figure 4.2 above shows
that the histogram is symmetrical along the center 0. Therefore, the multiple regression models
fulfill normality assumption in which the error term is normally distributed with zero mean and
constant variance.
4.9.1.3. Heteroskedasticity Test
One of the basic assumptions of classical linear regression model is that the probability
distribution of the disturbance term remains same over all observations of the explanatory
variables; i.e. the variance of each error term is the same for all the values of the explanatory
variable. This homogeneity of variance (or constant variance) is known as homoscedasticity.
However, in some cases the disturbance terms may not have the same variance. This condition of
non-constant variance or non-homogeneity of variance is known as heteroscedasticity.
Heteroscedasticity testing has been extensively studied for classical low-dimensional regressions
in the literature. Many popular tests examine whether the estimated residuals are correlated with
some caveats or any auxiliary variables that would be useful in explaining the departure from
0.2
.4.6
.81
Den
sity
-2 -1 0 1 2Residuals
62
homoscedasticity. Even if there are a number of tests to check heteroscedasticity like White’s
test, Goldfield-Quandt test and Breusch-Pagan test. In this particular study Breusch-Pagan
/Cook-Weisberg test for heteroscedasticity was employed.
Table 4.16: Breusch-Pagan / Cook-Weisberg Test for Heteroskedasticity
Model Chi2(1) P-value
1 1.44 0.2367
H0: Constant Variance
Variables: Predicted/Fitted Values of fund Utilization
Source: Own Survey and STATA13 Result, 2020
Therefore, following the test result in Table 4.16, we fail to reject the null of homoscedastic
assumption at 5% level of significance since p-value = 0.2367. Therefore, there is no problem of
heteroscedasticity in the regression model.
4.9.1.4. Multicollinearity
The other very important basic assumption of Classical Linear Regression Model (CLRM) that
has to be tested was collinearity among independent variables. Multicollinearity can also be
checked by the result of VIF (variance inflation factor) and the tolerance (ToL) value. According
to Gujirati (2004), Multicollinearity exists among independent variables when ToL<0.10 or
VIF>10. Therefore, as per Table 4.17, there is no problem of multicollinearity in the regression
model since mean VIF<10 and each independent variable has a ToL> 0.1.
Table 4.17: Multicollinearity between Independent Variables
Variables Collinearity Statistics
ToL (1/VIF) VIF
Financial management 0.43 2.32
Harmonization among UN Agency 0.47 2.12
Technical factor 0.64 1.55
Managerial Factor 0.95 1.04
Mean VIF 1.67
Source: Own Survey and STATA13 Result, 2020
63
4.9.2. Regression Analysis
4.9.2.1. Model Summary
Regression analysis concerned with the study of dependence of one variable, the dependent
variable, on one or more other variable, the explanatory (exogenous) variable (Gujarati, 2004)
A regression analysis was path to define the predictive power of the independent variable
(financial management, Harmonization among UN Agency, Technical factor and Managerial
factor) in explaining utilization of UN Agency fund. The results are thus presented in table 4.17.
Table 4.18: Model Summary
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 0.8083 0.6534 0.6438 0.48221
Predictors:(constant), managerial factor, Technical factor, financial management,
Harmonization among UN Agency
Source: Own Survey and STATA13 Result, 2020
The predictive power of the model is shown by R Squarer. R Square is measured of how well the
model is able to predict the changes in the actual data. R Square lies between 0 and 1, with
values over 0.50 indicating a good fit between the prediction and actual data. (Gujarati, 2004)
The model summary result in the Table 4.18 show that the variation in the independent variables
included in the regression model (financial Management factors, Harmonization factors,
Technical factor and managerial Factors) explained 65.34 percent of the variation in fund
utilization and the rest 34.66%of the variation in fund utilization was explained by other factors
which are not included in the regression model.
4.9.2.2. Analysis of Variance (ANOVA)
The ANOVA result in Table 4.19 indicates that the above discussed variation was significant as
evidence of F ratio of 68.33 with Pvalue =0.000 < 0.05 (level of significance). Thus, the model
was fit to predict fund utilization using financial management factor, Harmonization, Technical
factor, and Managerial factors.
64
Table 4.19: Analysis of Variance (ANOVA)
Source of Variation Sum of Squares df Mean Square F(4, 145) Sig.
Regression 63.5519 4 15.8879
68.33 0.0000 Residual 33.7164 145 0.2325
Total 97.2683 149 0.6528
Dependent Variable: Utilization of funds
Predictors: (constant), financial management factor, Harmonization among UN Agency,
Technical factors, Managerial factors
Source: Own Survey and STATA13 Result, 2020
4.9.2.3. Regression coefficient and Hypothesis Testing
Four major hypotheses were constructed in this study to test determinants of donor fund
utilization of UN agency fund in Amhara region. Hypothesis testing was conducted using 0.05
significant levels. The results were presented in Table 4.20 below.
Table 4.20: Multiple Regression Model
Model
Coefficients
T
P-value
Unstandardized
Coefficients
Standardized
Coefficients
Beta Std. Error Beta
(Constant) -0.511 0.318 . -1.61 0.110
Financial management 0.339 0.087 0.273 3.84 0.000*
Harmonization among UN Agency 0.500 0.076 0.484 6.50 0.000*
Technical factor 0.133 0.066 0.121 1.999 0.049**
Managerial Factor 0.162 0.066 0.122 2.45 0.016**
Note: * and ** indicates the regression coefficients are statistically significant at 1% and 5%
level of significance respectively.
Source: Own Survey and STATA13 Result, 2020
Therefore, based on the result in Table 4.20 and the above general mathematical form of the
regression model, the estimated regression model of this study is presented as;
65
𝑼𝑭𝒊 = −𝟎. 𝟓𝟏𝟏 + 𝟎. 𝟑𝟑𝟗𝑭𝑴𝒊 + 𝟎. 𝟓𝟎𝟎𝑯𝑹𝑴𝒊 + 𝟎. 𝟏𝟑𝟑𝑻𝑭𝒊 + 𝟎. 𝟏𝟔𝟐𝑴𝑭𝒊
Where, FM = Financial Management
HRM = Harmonization among UN Agency
TF = Technical Factor
MF = Managerial Factor
Among the factors affecting donor fund utilization i.e. financial management and harmonization
among UN agency have a statistically significant effect on donor fund utilization at 1% level of
significance since their p-value < 0.01. Whereas, technical factor and managerial factor have a
statistically significant effect on donor fund utilization at 5% level of significance since their p-
value < 0.05.
Financial management was the first contributor to the variation in donor fund utilization and it
was significant in influencing the level of donor fund utilization (p-value < 0.01). The coefficient
0.339 indicated that financial management had direct (positive) influence on donor fund
utilization i.e. keeping other things constant, a unit change in financial management lead to an
improvement in the level of donor fund utilization by 0.339units. This means that as financial
management increased by 1% donor fund utilization also increased by 33.9% and vice versa. The
Pearson correlation coefficient in Table 4.15 also supported the existence of a strong positive
statistically significant correlation (r = 0.7002, p-value = 0.000) between financial management
and donor fund utilization.
In conformity to the finding of this study Francis (2013) found that the effectiveness of donor
funded projects is determined by financial management, technical and managerial capacity of the
Hypothesis 1:
H0: Financial management has no positive significant effect on
donor fund utilization.
H1: Financial management has positive significant effect on
donor fund utilization.
66
human resources of the implementing agencies in his study of factors affecting donor aid use by
international organization. In support, Adan Haji (2013) in his study dealing with the relationship
between fund utilization and financial management found that financial management have a
pronounced effect on effective utilization of donor fund. Daniel (2015) in his study concerning
the determinants of donor fund utilization: the case of public sector capacity building program
(PSCAP) fund in implementing sectors of Oromia national regional state showed that financial
management have a strong positive and significant effect on donor fund utilization. Additionally,
studies by (Pride, Hughes and Kapoor, 2002), stressed on the importance of financial
management since it is difficult to achieve the priorities activities when there are no financial
management strategies or guideline. Therefore, the donor as well as receipt must be identifying a
key performance indicator that should be incorporate and established Proper financial
management that can ensure effective utilization of donor fund.
Therefore, all financial transactions of UN agency should be properly documented and recorded.
The approval system for all transactions by the authorized managers in UN Agency fund
utilization should be strictly managed. The cashbook of donor fund should be reconciled to the
balance on the bank statement every month for UN Agency bank account. Regarding duties and
responsibilities of staffs that are liable in handling donor fund financial duties are split between
different members of staff UN agencies and government should have a system of regularly
reviewing expenditures against approved budgets by joint monitoring, technical & string
committees. The recipient organization responsible should develop good internal control system
that is strongly enough for proper fund utilization. Additionally, the procedures & regulations for
fund management & Procurement should be flexible for implementation of activities at the given
time schedule. Program implementation manual (PIM) should be also adhered to all
implementing sectors.
67
Harmonization among UN agency was the second contributor to the variation in donor fund
utilization and it was significant in influencing the level of donor fund utilization (p-value <
0.01). The coefficient 0.500 indicated that harmonization among UN agency had direct (positive)
influence on donor fund utilization i.e. keeping other things constant, a unit change in
harmonization among UN agency lead to an improvement in the level of donor fund utilization
by 0.500units. This means that as harmonization among UN agency increased by 1% donor fund
utilization also increased by 50.0% and vice versa. The Pearson correlation coefficient in Table
4.15 also supported the existence of a weak positive statistically significant correlation (r =
0.2232, p-value = 0.006) between harmonization among UN agency and donor fund utilization.
The findings also in line with the study of (Bhutan, 2012) found that harmonization is
significantly reducing transaction cost and lessen the burden that multiplicity of UN procedures
and rule creates for its partners among the UN Agencies as well as fund receipts. In this regard,
harmonization can be realized when agencies agreed and coordinate activates to maintain
capacity development interventions and provide support to new aid modalities to assure effective
fund utilization.
According to the above result, UN agencies should harmonize among themselves establishing
common arrangements, simplifying procedures and sharing information to avoid duplication of
efforts in fund utilization. Additionally, UN agencies should establish a common joint
monitoring and evaluation system among themselves and should follow a reporting format
(FACE) that is the same or compatible among UN agencies. The time schedule & fiscal year for
reporting among UN agencies should be the same in order to secure effective utilization of donor
fund. Finally, redundancy of activity by UN agencies themselves should be avoided since it
forced recipient to spend much time on report preparation.
Hypothesis 2:
H0: Harmonization among UN agency has no positive significant
effect on donor fund utilization.
H1: Harmonization among UN agency has positive significant
effect on donor fund utilization.
68
Technical factor was the third contributor to the variation in donor fund utilization and it was
significant in influencing the level of donor fund utilization (p-value < 0.05). The coefficient
0.133 indicated that technical factor had direct (positive) influence on donor fund utilization i.e.
keeping other things constant, a unit change in technical factor lead to an improvement in the
level of donor fund utilization by 0.133 units. This means that as technical factor increased by
1% donor fund utilization also increased by 13.3% and vice versa. The Pearson correlation
coefficient in Table 4.15 also supported the existence of a moderate positive statistically
significant correlation (r = 0.5553, p-value = 0.000) between technical factor and donor fund
utilization.
In support, Oderada (1993) noted that lack of coordination at different level in making effective
use of technology, poor infrastructure, poor data system, lack of compatibility, lack of skilled
personnel, poor leadership style, poor work culture, excessive bureaucratic red tape and son on
lead to deprived donor fund utilization. From this we can say that technical factors can plan
crucial role in effective UN agencies fund utilization.
Therefore, donor fund recipient organization should use appropriate technology to utilize
agencies funds (fax, telephone, computers and internet connection). The recipient organization
should facilitate the provision of adequate infrastructure and equipment to support new
technologies which in turn promote effective donor fund utilization. Skilled personnel in
information communication technology also should be given priority to secure effective donor
fund utilization. Effective use of the available and new technology should be considered as a
determinantal factor in donor fund utilization and the data management systems used in the
donor fund recipient organization should be strongly compatible with the UN funding agencies.
Hypothesis 3:
H0: Technical factor has no positive significant effect on donor
fund utilization.
H1: Technical factor has positive significant effect on donor
fund utilization.
69
Managerial factor was the other contributor to the variation in donor fund utilization and it was
significant in influencing the level of donor fund utilization (p-value < 0.05). The coefficient
0.162 indicated that managerial factor had direct (positive) influence on donor fund utilization
i.e. keeping other things constant, a unit change in managerial factor lead to an improvement in
the level of donor fund utilization by 0.162 unit. This means that as managerial factor increased
by 1% donor fund utilization also increased by 16.2% and vice versa. The Pearson correlation
coefficient in Table 4.15 also supported the existence of a strong positive statistically significant
correlation (r = 0.7576, p-value = 0.000) between managerial factor and donor fund utilization.
The outcomes of finding agree with the study of (Ouma, 2012) whose findings revealed that
donor that were strong on the managerial capacity of implementing agencies as lack of (or
inadequate human resource capacity (Knowledge and skills) and lack of accountability, poor
understanding of donor expenditure, delay liquidation documents often presented difficult to
fund utilization. Daniel (2015) and Francis (2013) also found a significant relationship between
management of liquidity and management skill in their study of impact of managerial skills on
liquidity management.
Therefore, the managerial capacity of the human resources in the implementing agencies should
be improved through training and development to guarantee effective donor fund utilization
since in some managers of implementing organizations may have some knowledge and technical
skills gaps. Not only the managers, trainings should be organized for employees to improve the
capacity to undertake necessary duty/functions concerning donor fund utilization. Managers of
donor fund recipient organization should be also familiar & understand the donor expenditure
protocols eligible and accepted by donors to satisfy the funding agencies requirement.
Additionally, liquidation documents quality and timeliness should be addressed properly since
Hypothesis 4:
H0: Managerial factor has no positive significant effect on donor
fund utilization.
H1: Managerial factor has positive significant effect on donor
fund utilization.
70
these elements is one of the critical requirements in UN agency fund policies. The recipient
organization should have strong leadership styles, strong work culture, and excessive
bureaucratic procedures in fund utilization should be cult down. Lastly, government higher
officials, authorities and employees at each administrative level should be committed and
accountable for utilization of fund of UNDAF program and projects as the government programs
& projects are being done.
Table 4.21: Summary of Hypothesis
Hypothesis Accepted or
Rejected
Remark
H1: Financial Management has positive significant
effect on donor fund utilization.
Not Rejected Since P-value < 1%
(P-Value = 0.000)
H2: Harmonization among UN agency has positive
significant effect on donor fund utilization.
Not Rejected Since P-value < 1%
(P-Value = 0.000)
H3: Technical factor has positive significant effect
on donor fund utilization.
Not Rejected Since P-value <5%
(P-Value = 0.049)
H4: Managerial factor has positive significant effect
on donor fund utilization.
Not Rejected Since P-value < 5%
(P-Value = 0.016)
71
CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
Based on the end result of the study obtained through the questionnaires that from sectors of
UN agency fund user for 150 teams the following conclusion and recommendation were
organized.
5.1. Conclusion
The principal objective of this study was to examine the impact of financial management,
Harmonization Among UN Agency, Technical factor, and Managerial Factor, on UN Agencies
fund utilization in Amhara region.
The study was successful in accomplishing its research objective. Thus, based on the finding of
the study the following conclusions are drawn.
❖ The correlation analysis was undertaken to test the relationship between dependent (UN
Agencies fund utilization) and independent variable, Financial Management,
Harmonization among UN Agencies, Technical Factors and Managerial Factors.
Accordingly the research results of Pearson correlation designates positive and
significant relationship between the UN agency fund Utilization and Financial
management ,Harmonization among UN Agency, Technical Factors and Managerial
Factors (r =0.7002, 0.2332, 0.5553, 0.7576, n=150, p= .000) as P<0.01) respectively
which implies the existence of strongly positive and significant correlation between
variable. The study also revealed that financial management, Harmonization among UN
Agencies, Technical Factors and Managerial Factors of implementing sectors had
significant effect on Un Agency fund utilization (β1,β2, β3,β4 = 0.273, 0.484, 0.121,
0.122,p-value =0.000,0.000, 0.049, 0.016) which is less than α = 0.05)
❖ The multiple regression results revealed that the perceptions of financial management,
Harmonization among UN Agency, Technical factor and Managerial Factor, explain
65.34% of the variation in UN Agencies Fund utilization, indicating a good fit since it is
above 50%. This implies that other factors that are not included in the current study
72
accounted for the remaining 34.66% of variance in UN Agencies Fund utilization. The
regression model by itself is statistically significant at the 5% level (F-value = 68.33, p<
0.000).
❖ The multiple regression analysis revealed that financial management has a significant and
positive effect on UN Agencies fund utilization, and holding other independent variables
constant, it has more influence on UN agency fund utilization. The descriptive statistics
result also revealed that financial management is looks lack of efficient and effective in
various aspects such as on practical situation direct payment modalities advance payment
paid by government whereas the rest of other amount paid by Agencies these procedure
much Ethiopian government financial rules. Notification letter for the release of fund
from BOFEC or IPS are provided timely, program implementation manual (PIM) are
adhered to by all implementing sectors, any irregularities in financial management are
promptly reported, reports of previous years are available in the organization and the
procedures and regulations for fund management and procurement flexible for
implementation of activities at the given time schedule. It can be concluded that is the
facts it is the major factors that has contributed to the underlying problem .it is therefore
dominant or paramount that all implementing sectors introduce good financial
management practices so as to successful financial management for UN Agencies fund
utilization. In general, financial managements are the most responsible for UN Agencies
Fund utilization.
❖ In the multiple regression analysis revealed that the perception of Harmonization among
Agency has a significant effect on UN Agency fund utilization the descriptive statistic
result show that the majority of respondent expressed UN Agency are Harmonization
accordingly to their standards ,in further difference of opinion or other words they feel
that they do harmonized among themselves means for receipt it reduce transaction cost,
time saving and easy way of reporting system like FACE format report system .The
impacts of un harmonized themselves for deprived UN Agencies fund utilization. On
other hand harmonization have the low Pearson correlation coefficient relative to the
other variable. Thus, the relative important of the significant predictors was determined
by looking at the standardized coefficients
73
❖ The multiple regression analysis revealed that technical factor has significant and positive
effect on UN agencies fund utilization, and holding other independent variable constant it
has more influence on UN Agency fund utilization. The descriptive result revealed that
technical factor is not appropriately support UN Agencies fund utilization various aspects
such as organization is not used appropriate technology to utilize Agencies funds (Fax,
telephone ,computer and internet connection), unskilled coordination at different level of
in making effective use of the technology ,Data management system and compatibility
are not strong. Therefore, sufficient infrastructure and equipment which support new
technology (such as server, laptop, internet option, enough work space and furniture) and
building the capacity of ICT personnel, avoid the duplication effort among the other
grants is vital for the comprehensive UN Agency fund utilization.
❖ The multiple regression analysis revealed that managerial factors has significant and
positive effect on UN Agency fund utilization ,and holding other independent variable
constant, it has substantial effect on UN Agency fund utilization .The descriptive statistic
results also indicates that managerial factors not efficient and effective in various aspects
such as lack of managerial capacity of the human resource in the implementing agencies,
Training/refresher training are not organized to appropriate employees for improve the
capacity to undertake necessary duty ,manager are not familiars and understand the donor
expenditure protocols resulting in expenditures are ineligible which lead to rejection for
further funding by the donor ,liquidation documents quality and timelines which
complicate the Agencies fund release which obvious implication on levels of Agencies
fund utilization. Lack of technical and string committee perform their tasks on the seating
time interval, lack of strong leadership style, culture, and absence of bureaucracy, doesn’t
used performance measurement (BSC) as tool to measure the performance of employees
in implementation of UUDAF programs so long as this is fact it is the major factor that
has contributed to the underlying problem and so that they are responsible for deprived
UN Agencies fund utilization.
74
5.2. Recommendations
Depends up on the finding of this study, it is expected that the stakeholders (who include both
UN Agencies and government of organization leading decision makers and interested party to
decide on UN Agencies fund utilization in Amhara region and in, regions zones and wordas will
be motivate to gain a better understanding of issues pertaining or be relevant to UN agencies
fund. Owing to the critical role played by UN Agencies funded, especially to continue Ethiopians
successful path towards becoming a middle income country and climate resilient green economy
and help the country realize the objective of the GTP 11 and stay on course for achieving its
vision 2030.UN Agencies fund utilization effectiveness requires a high priority and there is thus
need to place Emphasis on the following areas:
I. Strengthening financial management system and associated operational frameworks to
increase utilization of fund that means organization are expected to have effective and
efficient fund utilization mechanisms to utilize resource allocated from UN Agencies.
Financial management highly linked with the effectiveness of donor fund utilized by a
continuous monitoring and evaluation is crucial and other concerned parts to make
appropriate adjustments. Starting from transfer of fund from UN Agencies to BOFEC,
there should be timely transfer of implementers and strengthening the coordination and
follow up system for utilization of resource efficiently
II. The message of technical factors like inadequate infrastructure and equipment support new
technology, UN skilled coordination, and lack of ICT personnel revealed in descriptive
statistic at different level scored means of 3.46 to 3.86.as a result of thus, the researcher
highly recommended provide a sufficient infrastructure such as ( fax ,telephone,
equipment, computer and internet connection ) with that of building the capacity of ICT
personnel, established a good data management system to deliver effective service of the
program.
III. The managerial factor the total scored of mean on average 3.533 and standard deviation
1.26 indicating in between neutrality and agreed Likert scale means that a large effect of
managerial factors on UNDAF fund utilization. Therefore, lack of managerial capacity of
human resource and poor quality, time line liquidation document affect the UN Agency
75
donor fund release. In facts coordinating and controlling UN program or project activities
to achieve the intended purpose.
IV. Implying that UNDAF programs at level of implementers should follow government
respondent it is possible to understand that the tight procurement system of public financial
management system which allows procurement to be made semiannually contradicts with
UN Agencies requirements to settle the fund with six or below six months. Thus, UN
Agencies should establish their own procurement system to increase the efficiency and
effectiveness in utilization of UN Agencies supported fund.
V. Reforming and simplifying UN Agencies policies and procedures such as adjustment of
budget utilization time from 6 month to one year because Ethiopian financial regulation
stated that budget allocated in one year so, employees attitude seat by this time interval,
obligation of 100% from first quarter released fund utilization pre requisition in the next
round released adjusted to 80% of the first released utilized and reported then next transfer
should be released without any restriction to increase utilization of fund.
5.3. Policy Implication
Research results showed a high overtime to financing ever increasing public expenditure, as a
result monetary deficit that have government or stakeholder emerge created policy to use funds
effectively and enhancing sustainability growth. This study a l s o finds significantly strong
influence on fund utilization behavior. The key driver of fund utilizations are financial
management factors, Harmonization, Technical factors and Managerial factors are in meeting
regulatory requirements. The broader implication for government decision makers and
organization as there is highly similar trend and phenomena for other donor funds. overall, there
is no doubt that UN Agency played remarkable job all the globe. Meanwhile like any
organization there should always be room for improvement. The UN Agencies fund program is
emphasized financial management factors. Harmonization, Technical factor and managerial
factors challenged as ominous to improve poor fund utilizations.
Further, the finding indicates that affect effectiveness of donor fund aid in UN Agencies include
financial management factor that technical factor, that attribute donor behavior, Harmonization
which reduced procedures, and managerial factors direct and significant effects on enhancing
76
fund utilized. The key areas include inadequate fund, wrong timing in fund disbursement,
inadequate human resource (skill and knowledge), and lack of accountability are crucial.
5.4. Areas for Further Research
As our country is not entirely covering its full expenditure from growth domestic source and
highly dependent on foreign aid or the fund from different donor agencies to spent in different
sectors for the issues of economics for developmental aspects or reforms, the study is better to be
pretend at national level, in other region and in different Non-Governmental organization
(NGO’s) to further identify and compare the other determinates of donor fund utilization
77
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84
APPENDIX
APPENDIX 1: Questionnaires
DEBREBIRHAN UNIVERSITY
COLLEGE OF BUSSINES AND ECONOMICE
DEPARMENT OF ACCOUNTING AND FINANCE
(MSc PROGRAMM)
This questionnaire is meant for conducting a research on Determinates of Donor Fund
Utilization: The case study of UN Agency fund in Amhara region. It is to filled by concerned
officer in the implementing sectors. To achieve the collection of relevant information, your
honest and relevant will have a paramount important make the study complete and reliable.
All your response will be kept confidential and unnamed. I will not use them for other purposes
other than this study. Thus, you are not required to write your name on the questionnaire. Rather
please only select your response among choices given and briefly your explanation where you
are asked to do so. For all the efforts and the time, you dedicated ti fill and return this
questionnaire – that would not otherwise make this study complete and representative –I would
like to say thank you in Advance.
PART A: PERSONAL INFORMATION
1. Gender:
Male Female
2. Age:
18-29 30-40 41-50 51-60
3. Your level of Education:
Diploma Bachelors Masters PhD
4. Your responsibility in donor fund /UN Agency Program:
1. Finance officer 2. Government cooperation officer /External resources
Mobilization officer
3. Internal Audit Officer 4. Purchasing finance & property process owner
85
5. Planning &budgeting process owner 6 others
5. The duration you have worked on the sector put tick mark“√” in the box provided
1. 1-5 years3. 11- 15 years
2. 6-10 years4. 16-20 year
5. 21- 25 years
6. Other ---------------------------
PART B
Please sign post the extent to which you agree/disagree that each of the level of financial
management, UN agency Harmonization, technical factor and managerial factors on utilization
/implementation of UN agency. Thus, kindly please select your level of agreement as per the
Likert scales depicted on the right side the table tick marks “√” where appropriate
1=Strongly Disagree, 2=Disagree, 3=Not sure, 4=Agree, 5= Strongly Agree.
No Statement 1 2 3 4 5
|Financial Management
1 All financial transactions of UN Agency are properly documented and
recorded
1 2 3 4 5
2 There is an approval system for all transactions by the authorized managers
in UN Agency fund utilization.
1 2 3 4 5
3 There is a chart of accounts used to categorize expenditures in
implementing sectors for all UN Agency program fund.
1 2 3 4 5
4 The balance in the cashbook is reconciled to the balance on the bank
statement every month for UN Agency bank account
1 2 3 4 5
5 Financial duties are split between different members of staff 1 2 3 4 5
6 UN Agencies and government have a 'system of regularly reviewing
expenditures against approved budgets by joint monitoring, technical &
string committees.
1 2 3 4 5
7 The government and UN Agencies are aware that they are responsible for
ensuring strong internal control systems.
1 2 3 4 5
8 Internal control system is strongly enough for proper fund utilization. 1 2 3 4 5
86
No Statement 1 2 3 4 5
9 Any irregularities in financial management are promptly reported 1 2 3 4 5
10 There is adequate supervision of accounts in UN agency 1 2 3 4 5
11 FACE Reports are user-friendly for all stakeholders and provide necessary
details and information.
1 2 3 4 5
12 Reports of previous years are available in the organization 1 2 3 4 5
13 The procedures & regulations for fund management & Procurement is
flexible for implementation of activities at the given time schedule.
1 2 3 4 5
14 Program implementation manual (PIM) are adhered to by all implementing
sectors.
1 2 3 4 5
15 The duration provided for implementation of fund released from UN
Agencies is enough to accomplish the program/project activities
1 2 3 4 5
16 Terms and conditions of sub agreement are adhered to by all the
implementing sector
1 2 3 4 5
17 Notifications letter for the release of fund from BoFEC or IPS are provided
timely.
1 2 3 4 5
18 Based on Program implementation manual (PIM) all IPS distribute 80% of
the budget to wordas.
1 2 3 4 5
19 On practical situation direct payment modalities advance payment paid by
government where as the rest of other amount paid by Agencies these
procedure much Ethiopian government financial rules
1 2 3 4 5
|| Harmonization among UN Agencies
1 UN Agencies are harmonized among themselves establishing common
arrangements, simplifying procedures and sharing information to avoid
duplication
1 2 3 4 5
2 UN Agencies have established a common joint monitoring and evaluation
system among themselves
1 2 3 4 5
3 The reporting format (FACE) used for reporting among UN Agenciesare
the same. 1 2 3 4 5
4 Chart of accounts and account codes used for reporting among UN
Agenciesare the same
1 2 3 4 5
5 The time schedule & fiscal year for reporting among UN Agencies is the
same 1 2 3 4 5
87
No Statement 1 2 3 4 5
6 Different UN Agencies allocated funds in different activities of a program
( there is no redundancy of activity by Agencies themselves) 1 2 3 4 5
III Technical factor
1 Organization used appropriate technology to utilize Agencies funds (fax,
telephone, computers and internet connection)
1 2 3 4 5
2 Adequate infrastructure and equipment to support new technologies 1 2 3 4 5
3 Skilled personnel in information communication technology. 1 2 3 4 5
4 Strong coordination at different levels in making effective use of the
technology
1 2 3 4 5
5 Data management systems and compatibility are strong 1 2 3 4 5
IV .Managerial Factors
1
Managerial capacityof the human resources in the implementing
Agencieswell perform 1 2 3 4 5
2 Managers of implementers have adequate knowledge and technical skills 1 2 3 4 5
3 Training/refresher trainings are organized for employees to improve the
capacity to undertake necessary duty/functions 1 2 3 4 5
4 Managers are familiars & understand the donor expenditure protocols
resulting in expenditures are eligible and accepted by donors
1 2 3 4 5
5 Liquidation documents quality and timeliness are appropriate to UN
Agency fund policies . 1 2 3 4 5
6 Technical& string committee perform theirtasks on the seating time
interval. 1 2 3 4 5
7 Permanent or contract staffs are assigned permanently for implementation
of UNDAF. 1 2 3 4 5
8 Strong leadership styles, culture, and absence of bureaucracy.
9 Performance measurement (BSC) is used as tool to measure the
performance of employees in implementation of UNDAF programs.
10 Government higher officials, Authorities and employees at each
administrative level are committed and accountable for utilization of fund
of UNDAF Program and projects as the government programs & projects
are being done.
V. Utilization of funds
88
No Statement 1 2 3 4 5
1 100% of the funds received are utilized for projects andnone of them funds
goes for overheads.
1 2 3 4 5
2 Donor funds are utilized for the purpose it was meant. 1 2 3 4 5
3 Implementing sectors have managed to complete all projects and realized
the intended impact.
1 2 3 4 5
4 For purpose of transparency in the way funds were utilized, implementing
sectors prepare donor reports that reflect the true status of implementation
in the sectors.
1 2 3 4 5
5 Stakeholders involve on the planning and utilization of the funds. 1 2 3 4 5
6 The financial accountability for UN Agency fund can be rated as
satisfactory
1 2 3 4 5
7 Implementing sectors in the region properly account for funds advanced to
them by BoFEC. 1 2 3 4 5
8 The Federal and regional government and donors have developed Annual
work plans and budgets, setting out how they expect to achieve the goals
agreed in dialogue with others Implementation plans are likely to be
adapted during the course of a project in the light of feedback and other new
circumstances.
1 2 3 4 5
ወድ ጊዜዎንትን ሰዉተዉ መጠይቁን በመሙላት ስለተባበሩኝ አስቀድሜከልብአመስግናለሁ ::
MesfinBaykedagn
ለበለጠ መረጃ
Phone no. +251913949702, +251994996773
E-mail- [email protected]
Web. [email protected]
89
Appendix 2: UNDAF Program Budget Released and Utilization Rate for nine years up to June 2019
Year Trend
Released Amount (From 2011/12 to 2019/20)
Total
Liquidation
Remaining
Balance
Utilization Rate
% from
Released
Balance Brought
from Year 200
2up to 2010 EFY
Transferred
during the years
Total Fund
Available for
years.
2003 Up to June 30 105,744,203.26 130,171,792.93 235,915,996.19 141,157,431.75 94,758,564.44 60%
2004 Up to June 30 94,758,564.44 170,214,527.57 264,973,092.01 207,125,204.54 57,847,887.47 78%
2005 Up to June 30 57,847,887.47 244,166,623.74 302,014,511.21 220,847,733.48 81,166,777.73 73%
2006 Up to June 30 81,166,777.73 204,032,537.94 285,199,315.67 191,106,099.08 94,093,216.59 67%
2007 up to June 30 94,093,216.59 274,301,186.84 368,394,403.43 232,900,090.80 135,494,312.63 63%
2008 up to June30 135,494,312.63 231,057,273.02 366,551,585.65 286,975,078.37 79,576,507.28 78%
2009 up to June 30 79,576,507.28 180,916,139.18 260,492,646.46 187,770,009.34 72,722,637.12 72%
2010 up to June30 72,722,637.12 175,228,025.12 247,950,662.24 189,896,311.91 58,054,350.33 77%
2011 up to June30 58,054,350.33 178,527,777.82 236,582,128.15 189,665,350.06 46,916,778.09 80%
90
Appendix 3: Summary of UNDAF Fund Released and Liquidation Rate by IPs
s.no IMPLMENTER (BBF from 2010) Released JUN
during the period
Total Amount Utilization Up to
JUN 30/2007
Cash returned
to Agency
Outstanding
Balance Up to JUN
30,2015
% of
Utilization
1 BOE 6,212.513.00 4,634,294.34 6,478,357.15 3,801,414.21 459,321.00 2,217,621.94 0.59
2 HB 28,443,792.43 40,915,996.43 48,757,425.97 23,056,835.96 162,600.00 25,537,990.01 0.47
3 DPFEPCO 1,313,572.02 35,037,218.38 44,942,389.65 27,890,439.02 1,509,804.55 15,542,146.08 0.62
4 BOWRD 1,102,264.95 1,860,627.65 2,244,629.26 1,145,549.95 0.00 1,099,079.31 0.51
5 VERA 5,354,812.84 3,738,109.24 4,581,622.03 3,980,711.11 0.00 600,910.92 0.87
6 BOWCA 6,468,885.78 73,533,309.93 87,601,415.54 54,900,756.38 0.00 32,700,659.16 0.63
7 BOJ 1,470,599.58 7,781,631.94 7,781,631.94 4,437,490.00 0.00 3,344,141.94 0.57
8 Supreme Court 2,895,231.82 9,173,115.77 9,520,930.67 7,560,009.78 0.00 1,960,920.89 0.79
9 PLAN Comm. 598,653.38 54,669,404.38 92,585,526.14 54,714,553.80 0.00 37,870,972.34 0.59
10 BOFEC 1,174,433.99 27,614,556.78 37,372,812.67 26,639,276.43 0.00 10,733,536.24 0.71
11 BOLSA 3,020,572.98 15,342,922.00 26,270,499.65 22,442,253.68 0.00 3,828,245.97 0.85
GRAND TOTAL 51,849,032.283 274,301,186.84 368,394,397.60 230,768,365.25 2,131,725.55 135,494,306.80 0.63
Source: Amhara Bureau of Finance & Economic Development 2011 E.C Financial report
91
Appendix 4: List of sample Sector
1. Bureau of Finance and Economic Cooperation
2. Bureau of child and Women Affair
3. Bureau of Water Irrigation and Energy,
4. Bureau of Education
5. Agriculture Bureau
6. Norh Shoa zone Finance and Economic cooperation
7. Awi zone Finance and Economic cooperation
8. South Gonder Finance and economic cooperation
9. North wello Finance and Economic cooperation
10. MidaWorda Finance And Economic cooperation
11. MerabetieWorda Finance and Economic cooperation
12. MoretenaJiru finance Economic cooperation
13. .AsgirtWorda finance and economic cooperation
14. .Hager Mariam finance and economic cooperation
15. .Berehetworda Finance and economic Cooperation
16. . Tarma Ber worda Finance and cooperation
17. AtayeWorda Finance and Economic cooperation
18. Antsokiaworda Finance and Economic cooperation
19. .GishieWorda Finance and Economic cooperation
20. .Menz Gera Worda Finance and Economic Cooperation
21. MenzkeyaWorda Finance and Economic Cooperation
22. Menz Mamma Worda Finance and Economic cooperation
23. Menz Lalo Worda Finance and Economic Cooperation
24. Debire-Birhan Health Since college
25. . DebireBirehanReferal Hospital
26. . DebireBirehan Town Finance and Economic Cooperation
27. Angolel end Tera worda Finance and Economic Cooperation
28. MinjarWorda Finance and Economic cooperation
29. Basoworda Finance and Economic Cooperation
92
Appendix 6: Financial management Factors
S.
NO
Statement
Strongly
Disagree
Disagree
Not Sure
Agree
Strongly
Agree
Mean Std. Dev. Var.
1 All financial transactions of UN Agency are properly documented
and recorded
5(3.33%) 11(7.33%) 36(24%) 45(30.%) 53(25.3%) 3.87 1.08 1.17
2 There is an approval system for all transactions by the authorized
managers in UN Agency fund utilization.
4(2.67%) 9(6.00%) 25(16.67%) 58(38.67
%)
54(36.%) 3.99 1.00 1.01
3 There is a chart of accounts used to categorize expenditures in
implementing sectors for all UN Agency program fund.
3(2.00%) 9(6.00%) 19(12.67) 50(33.33
%)
69(46.
%)
4.15 0.99 0.98
4 The balance in the cashbook is reconciled to the balance on the
bank statement every month for UN Agency bank account
4(2.67%) 10(6.67%) 19(12.67%) 65(43.33
%)
52(34.67%) 4.00 0.99 0.98
5 Financial duties are split between different members of staff 7(4.67%) 15(10.00%) 25(16.67%) 63(42.00
%)
40(26.67%) 3.76 1.09 1.20
6 UN Agencies and government have a 'system of regularly
reviewing expenditures against approved budgets by joint
monitoring, technical & string committees.
4(2.67%) 15(10.00%) 33(22.00%) 47(31.33
%)
51(34.00%) 3.84 1.08 1.82
7 The government and UN Agencies are aware that they are
responsible for ensuring strong internal control systems.
3(2.00%) 11(7.33) 26(17.33) 55(36.67
%)
55(36.67%) 3.99 1.00 1.02
8 Internal control system is strongly enough for proper fund
utilization.
6(4.00%) 26(17.33%) 32(21.33%) 48(32.00.
%)
38(25.33%) 3.57 1.16 1.34
9 Any irregularities in financial management are promptly reported 4(2.67%) 18(12.00%) 33(22.00%) 53(35.33
%)
42(28.00%) 3.74 1.07 1.16
10 There is adequate supervision of accounts in UN agency 4(2.67%) 13(8.67%) 29(19.33%) 59(39.33
%)
45(30.00%) 3.85 1.03 1.06
11 FACE Reports are user-friendly for all stakeholders and provide
necessary details and information.
1(.67%) 16(10.67%) 54(36.00%) 39(26.00
%)
40(26.67%) 3.67 1.00 1.01
12 Reports of previous years are available in the organization 2(1.33) 11(7.33%) 46(30.67%) 45(30%) 46(30.67%) 3.81 0.99 0.99
93
Source: Own Survey and STATA13 Result, 2020
13 The procedures & regulations for fund management &
Procurement is flexible for implementation of activities at the
given time schedule.
5(3.33%) 22(14.67) 40(26.67) 53(35.33) 30(20%) 3.54 1.07 1.15
14 Program implementation manual (PIM) are adhered to by all
implementing sectors.
4(2.67%) 20(13.33%) 39(26%) 47(31.33
%)
40(26.67%) 3.66 1.09 19
15 The duration provided for implementation of fund released from
UN Agencies is enough to accomplish the program/project
activities
11(7.33%) 31(20.67) 33(22.00%) 43(28.67
%)
32(21.33%) 3.66 1.23 1.52
16 Terms and conditions of sub agreement are adhered to by all the
implementing sector
9(6.00%) 27(18.00%) 39(26.00%) 46(30.67
%)
29(19.33%) 3.39 1.16 1.35
17 Notifications letter for the release of fund from BoFEC or IPS are
provided timely.
3(2.00%) 32(21.33%) 33(22.00%) 47(31.33
%)
35(23.33%) 3.52 1.12 1.27
18 Based on Program implementation manual (PIM) all IPS
distribute 80% of the budget to wordas.
4(2.67%) 12(8.00%) 63(42.00%) 46(30.67
%)
25(16.67%) 3.50 0.95 0.91
19 On practical situation direct payment modalities advance payment
paid by government whereas the rest of other amount paid by
Agencies these procedure much Ethiopian government financial
rules
4(2.67%) 17(11.33%) 56(37.33%) 35(23.33
%)
38(25.33%) 3.57 1.07 .1.14
Total – out of 1564 Q (19Q*150) 87 325 680 944 814 71.08 20.17 39.18
Average….. 3.74 1.06
94
Appendix 7: Harmonization among UN Agency
Source: Own Survey and STATA13 Result, 2020
S.
NO
Statement
Strongly
Disagree
Disagree
Not Sure
Agree
Strongly
Agree
Mean Std.
Dev.
Var.
1 UN Agencies are harmonized among themselves establishing
common arrangements, simplifying procedures and sharing
information to avoid duplication
20(13.33%) 24(16.00%) 12(8.00%) 45(30.00%) 49(32.67%) 2.50 0.65 0.70
2 UN Agencies have established a common joint monitoring and
evaluation system among themselves
30(13.33%) 23(15.33%) 14(9.00%) 52(34.67) 41(27.33%) 3.80 0.94 0.88
3 The reporting format (FACE) used for reporting among UN
Agencies are the same.
3(2.00%) 16(10.67%) 15(10.00%) 74(49.33) 42(28.00%) 3.92 0.94 0.89
4 Chart of accounts and account codes used for reporting among
UN Agencies are the same
20(13.33%) 10(6.00%) 34(22.67%) 73(48.67%) 13(8.67%) 3.84 0.63 0.40
5 The time schedule & fiscal year for reporting among UN
Agencies is the same
0(0.00%) 24(16.00%) 30(20.00%) 65(43.33%) 31(20.67%) 3.84 0.74 0.55
6 Different UN Agencies allocated funds in different activities of a
program (there is no redundancy of activity by Agencies
themselves)
9(6.00%) 28(18.67%) 46(30.67%) 42(28.00%) 25(16.67%) 3.31 1.113 1.29
Total out of 900 Q(6Q*150) 9 125 151 351 191 21.21 5.0153 4.7036
Average ------------ 3.53 0.8338 0.7839
95
Appendix 8: Technical Factor
Source: Own Survey and STATA13 Result, 2020
S.
NO
Statement
Strongly
Disagree
Disagree
Not Sure
Agree
Strongly
Agree
Mean Std. Dev. Var.
1
Organization used appropriate technology to utilize
Agencies funds (fax, telephone, computers and internet
connection)
2(1.33%) 16(10.67%) 33(22.%) 49(32.67%) 50(33.33%) 3.86 1.04 1.08
2 Adequate infrastructure and equipment to support new
technologies
4(2.67) 37(24.67%) 38(25.33%) 42(28%) 29(19.33%) 3.36 1.13 1.28
3 Skilled personnel in information communication
technology.
3(2.00%) 26(17.33%) 45(30%) 48(32.%) 28(18.67%) 3.48 1.04 1.09
4 Strong coordination at different levels in making effective
use of the technology
4(2.67%) 0(0.00%) 84(56%) 37(24.67%) 25(16.67%) 3.53 .86 .74
5 Data management systems and compatibility are strong 3(2.00%) 23(15.33%) 36(24%) 63(42.%) 25(16.67%) 3.56 1.00 1.01
Total –out of 750 (5Q *150) 16 23 236 239 157 17.79 5.07 5.2
Average ---- 3.558 1.014 1.04
96
Appendix 8: Managerial Factors
Source: Own Survey and STATA13 Result, 2020
S.
NO
Statement
Strongly
Disagree
Disagree
Not Sure
Agree
Strongly
Agree
Mean Std. Dev. Var.
1 Managerial capacity of the human resources in the implementing
Agencies well perform 8(5.33%) 19(12.67%) 28(18.67%) 60(40.00%) 35(23.33%) 3.63 1.13 1.28
2 Managers of implementers have adequate knowledge and technical
skills 5(3.33%) 30(20.00%) 40(26.67%) 48(32.00%) 27(18.00%) 3.41 1.10 1.21
3 Training/refresher trainings are organized for employees to improve
the capacity to undertake necessary duty/functions 13(8.67%) 17(11.33%) 30(20.00%) 58 (38.67%) 32(21.33%) 3.52 1.19 1.43
4 Managers are familiars & understand the donor expenditure
protocols resulting in expenditures are eligible and accepted by
donors
8(5.33%) 21(14.00%) 39(26.00%) 43(28.67%) 39(26.00%) 3.56 1.17 1.37
5 Liquidation documents quality and timeliness are appropriate to UN
Agency fund policies. 5(3.33%) 11(7.33%) 35(23.33%) 56(37.33%) 43(28.67%) 3.80 1.04 1.08
6 Technical& string committee perform their tasks on the seating time
interval. 7(4.67%) 22(14.67%) 34(22.67%) 50(33.33%) 37(24.67%) 3.58 1.14 1.31
7 Permanent or contract staffs are assigned permanently for
implementation of UNDAF. 6(4.00%) 13(8.67%) 48(32.00%) 54(36.00%) 29(19.33%) 3.58 1.02 1.05
8 Strong leadership styles, culture, and absence of bureaucracy. 8(6.00%) 33(22.00%) 47(31.33%) 41(27.33%) 20(13.33%) 3.20 1.11 1.23
9 Performance measurement (BSC) is used as tool to measure the
performance of employees in implementation of UNDAF programs. 10(6.67%) 22(14.67%) 33(22.00%) 47(31.33%) 38(25.33%) 3.54 0.20 0.47
10 Government higher officials, Authorities and employees at each
administrative level are committed and accountable for utilization of
fund of UNDAF Program and projects as the government programs
& projects are being done.
10(6.67%) 20(13.33%) 34(22.67%) 55(36.67%) 31(20.67%) 3.51 1.16 1.34
Total out of 1500 Q( 10 Q*150) 80 208 368 512 331 35.33 10.26 11.77
Average ------------ 3.533 1.026 1.177
97
Appendix 9: Fund utilization
Source: Own Survey and STATA13 Result, 2020
S.NO
Statement
Strongly
Disagree
Disagree
Not Sure
Agree
Strongly
Agree
Mean Std. Dev. Var.
1 100% of the funds received are utilized for projects and none of
them funds goes for overheads.
8(5.33%) 21(14.00%) 39(26.00%) 40(26.67%) 42(28.00%) 3.58 1.19 1.41
2 Donor funds are utilized for the purpose it was meant. 7(4.67%) 23(15.33%) 30(20.00%) 55(36.67%) 35(23.33%) 3.58 1.14 1.30
3 Implementing sectors have managed to complete all projects
and realized the intended impact.
6(4.00%) 25(16.67%) 50(33.33) 43(28.67%) 26(17.33%) 3.38 1.07 1.16
4 For purpose of transparency in the way funds were utilized,
implementing sectors prepare donor reports that reflect the true
status of implementation in the sectors.
5(3.33%) 19(12.67%) 22 (14.67%) 58(38.67%) 46(30.67%) 3.80 1.11 1.23
5 Stakeholders involve on` the planning and utilization of the
funds.
3(2.00%) 14(9.33%) 26(17.33%) 59(39.33%) 48(32.00%) 3.90 1.02 1.04
6 The financial accountability for UN Agency fund can be rated
as satisfactory
7(4.67%) 24(16.00%) 45(30.00%) 47(31.33%) 27(18.00%) 3.42 1.10 1.21
7 Implementing sectors in the region properly account for funds
advanced to them by BoFEC.
10(6.67%
)
29(19.33%) 30(20.00%) 52(34.67%) 29(19.33%) 3.40 1.19 1.42
8 The Federal and regional government and donors have
developed Annual work plans and budgets, setting out how
they expect to achieve the goals agreed in dialogue with others
Implementation plans are likely to be adapted during the course
of a project in the light of feedback and other new
circumstances.
5(3.33%) 18(12.00%) 40(26.67%) 41(27.33%) 46(30.67%) 3.70 1.13 1.27
Total – out of 1200Q ( 8Q *150) ---------- 51 173 282 395 299 28.76 8.95 10.04
Average -------------------------------
98