Examining the effect of financial planning on the financial sustainability of selected local government authorities in Tanzania: The moderating effect of good governance

Abstract

This study examines how financial planning affects the financial sustainability of local government authorities in Tanzania. It draws on Agency Theory and Institutional Theory to guide the research. Using an explanatory research design, the study employs quantitative data analysis methods, including descriptive and inferential analyses, facilitated by IBM SPSS and Amos SPSS tools. Data is collected through questionnaires and analyzed with descriptive and inferential statistics, including Structural Equation Modeling (SEM). The results show that financial planning positively influences the financial sustainability of local government authorities. The study finds a stronger correlation between financial planning and sustainability in authorities that do not adhere to good governance practices, compared to those that follow good governance. The conclusion highlights that many local government authorities face sustainability challenges, which can be addressed by improving financial planning and performance evaluation procedures. The study recommends that management focus on enhancing financial planning practices to boost financial sustainability.