The Efficiency of Public Service Delivery: A Study in Selected Urban Local Governments in Oromia Region, Ethiopia Efficiency of Public Service Delivery

Abstract

This paper evaluated the relative efficiency of urban local governments in Ethiopia, Oromia
region in the delivery of different services during the period of 2016/17- 2020/21 using data
envelopment analysis (DEA). Recurrent expenditure and capital expenditure are used as inputs,
and population size and surface area of the town are used as outputs to measure efficiency. DEA
with CCR and BCC models is used to measure efficiency. The determinants of efficiency are also
analyzed by applying Tobit normal regression. Revenue per population, employee expenditure
per population, population density, and population size are used as explanatory variables on the
efficiency score. The overall technical efficiency measurement result shows that most of the
towns were inefficient during the five - year period, and the mean efficiency level of the towns
was decreasing from year to year. The causes of the inefficiency were both management-related
and scale-related factors. The Tobit regression found that revenue per population, employee
expenditure per population, and population size significantly influenced the efficiency scores of
the studied towns. Therefore, this paper suggests that administrations of the studied towns
improve their efficiency by correcting management - related and other factors that are the
causes of the inefficiency.