Factors Associated with Utilization of Donor Funds in Somali Region of Ethiopia

Abstract

Aims: Donor funds play a critical role in the provision of social services and development process in developing countries, however poor utilization of the donor funds has been reported as a major barrier to achieving this. The study investigated the factors that influence the use of donor funds. Study design: This was a cross-sectional survey using quantitative method.  Place and duration of study: Jijiga Town of Somali Region between June   and July 2020. Methodology: Descriptive analysis was done using Relative Importance Index (RII) and Inferential statistics was conducted using correlation analysis and Pearson’s coefficient was performed to examine the effects of the four independent variables (Financial management practice, Human resource capabilities, stakeholder’s participation in planning, coordination and communication and Monitoring and Evaluation) and utilization of the donor- funded projects. Results: The study found lower utilization rate of donor funds across all the sectors in the region compared to domestic funds with utilization rate for domestic resources ranged from 93%-100% compared with 43% utilization rate for donor funds. All the four predictor variables show positive correlation with utilization of donor funds, p value less than 0.01. Monitoring and Evaluation has the highest correlation, r=0.754, n=79, p=0.0003) followed by Stakeholder Participation, r=0.695, n=79, p=0.0005), Human Resource Capabilities r=0.654, n=79, p=0.0004) and Financial Management Practice with r=0.634, n=79, p=0.0005). Conclusion: The study reaffirmed the poor utilization of donor-funds in most developing countries and the associated factors which are major barriers to socio-economic development and will contribute to knowledge management in the region and help all stakeholders in improving utilization of donor funds.