Corporate Governance in Jordan

Corporate Governance in Jordan Municipalities

The Great Ain Al-Basha Municipality

Othman M. Ghnaim

Radwan M.El-Anati

The aim of this study is to review the objectives of corporate Governance  and their implementation used by Jordan Municipalities.

The researchers use twenty-0ne measures to investigate the extent of implementing the corporate governance in measuring the efficiency of the Municipality:  rendering services, Staff, Contingencies and the interaction with its local community.

The main result of the study should that only (28.25%) of corporate Governance is attained, the highest result is achieved in the efficiency of services rendered (2.4/5) while the lowest is in readiness of the Municipality in contingency cases (0/5).

The main recommendation of this study is a dopting and implementing the objectives if corporate Governance by the Municipality as a part of its culture and updating  legislation and doing the necessary modification in the organization chart.

Key Words: corporate Governance, Municipality

Introduction

Municipalities in Jordan face a set of socioeconomic and administrational problems which affect negatively on its performance. To solve these problems and to help Municipalities in achieving sustainable socioeconomic development. It is necessary to adopt and apply corporate governance.

The aim of this study is to review the objectives of corporate governance and their implementation used by Municipalities.

The main research question investigates the objectives set for corporate governance of municipal enterprises and how successfully the objectives are attained. To make this investigation, researchers set four hypothesis: the first three are related to operating efficiency for services, staff  and contingency cases, but the fourth one is related to the functional interaction of the Municipality in problem solving of the people.

The case study is Ain-Basha Municipality which located in north west of Amman; The population of this Municipality is a bout 356,000 habitants (Jordan Department of statistics 2004). There are five local areas related to this Municipality. 

Literature Survey

Mari showed in his dissertation that corporate Governance aims both directly and indirectly at better services and improving the ability of responding in contingencies. He assured that functional interaction promotes problem–solving and objective achievement in Municipality (Mari,2007).

Tladi works on developing skills and competences to implement corporate Governance in free state municipalities; in this research he focused on developing the human resource of local government which requires attention not only to issues of skills development and competencies but also other institutional changes (Tladi, 2007).

Navrbjerg integrates the issues of  municipality in the discussions on personnel policies and to enhance employee participation and co-determination. This paper presents the most important results of an evaluation of the co-operations system in municipalities and countries (Navrbjerg,2007).

Pretoria mentioned in his paper that Governance and administration cluster strives to improve the quality life of the people by improving governance. (Pretoria, 2007).

Research Methodology

Empirical material consist of in-depth interviews and direct observation . The researchers use twenty– one measures derived from Municipality law in Jordan; these measures are used to investigate the extent of implementing the corporate  Governance in Ain-Basha Municipality which is used to test the research four hypothesis. To evaluate these measure ( likert ) scale is used.

Hypothesis Testing

The first hypothesis :

H0: The operating efficiency for rendering services in Ain Al-Basha Municipality is weak.

To test this hypothesis  the following (14) measures are used and evaluated by using likert scale as follows:

Table (1-1)

Measures of Services

Category of the service	Weight(5)
Town  & streets Planning	2
Building Liciensing	2
Sewing Services	2
Shopping Services	2
Small industries services	3
Transportation Services	3
Measurement Services	0
Culture and spots	4
Quality control health services	3
Public Health	4
Public Publicity	3
Public Weight in Markets	0
Preventing risks of wild animals	3
Clearing Streets Services	2
After death services	2
Average	2.4

Since the above average 2.4<3 (mid-point of the scale) we accept null hypothesis.

 The second hypothesis :

Ho: The operating efficiency for human resources in AinAl-basha Municipality is weak.

The researchers observed that threre is no performance evaluation system for dtaff in this Municipality, therefore the researchers use a compensate methodology by helping the president of the Municipality by his following up day by day performance.

The efficiency of the staff 2.25/5 the researchers find an evidence to support this results as mentioned by table (2-1) as follows:

Table (2-1)

Staff Performance Evaluation

Critria	Number of Employees	Weight of Performance evaluation(5)
Good	150	3.5
Medium	150	2.5
Very weak (without work)	100	0
Total	400	2.25

Employees efficiency = (150x 3.5 + 150 x 2.5 + 100x 0 ) / 400 = 2.25

                                   ________________________

                                                   

Since the Municipality employees efficiency in this Municipality is 2.25<3, therefore we accept the null hypothesis.

The Third hypothesis :

Ho: the readiness of Ain Al-basha Municipality in contingency cases is weak.

To test this hypothesis, the researchers use five measures to evaluate this readiness in contingency cases. The end results for the readiness is 0/5 which means not the null hypothesis is only accepts but there is no readiness for this Municipality in contingency cases at all . The following table (3-1) shows the above result.

Table( 3-1)

The readiness in contingency cases

Critria*	Weight(5)
Fire risks	0
Floods	0
Relief Services	0
Hazards prevention	0
Building damages risks	0
Total	0/5

*These criteria are devised from the Jordan Municipality law.

The forth hypothesis:

Ho: The functional interaction for Ain Al-basha Municipality in problem solving is weak.

The researchers use the direct observation for the people in the Municipality area, and they ask a random sample from the relatives, friends, and neighbours, they found the functional interaction is evaluated by 1/5, the president accepted this result even though he is informal functional interactive by his personality in or out his position.

Since the above result is 1 < 3 we accept the null hypothesis.

Results and Recommendations   

Review the objectives set for corporate governance for Ain-Basha Municipality and how these objectives successfully attained, the following table (4-1) showed that 28.25% of these objectives are successfully achieved:

Table 4-1

The objective of Corporate Governance

The objective of Corporate Governance	Weight(5)
Rendering Services	2.4
Human Resources	2.25
Contingencies	0
Functional Interaction	1
Average	1.41

The percentage of objectives achieved =	1.41	*100%= 28.25%
	5

The researchers asked the president of the Municipality in–depth interview about the reasons behind this weak (28.25%). He assured: that h this issue (corporate Governance) is not known empirically by the Municipality in addition to the following obstacles:

1.     The line of responsibility is not clear in which there is a contradiction with the responsibilities of other parties such as civil defence, water and electricity Authoritiy and telecommunication company ….etc.

2.     Corruption and in-between phenomenon.

3.     Traditional control procedures used by the accounting perieu who is responsible for auditing.

Recomondations

In conclusion, the researchers recommend the following:

1.     Adopting and implementing the corporate Governance by the Municipality as a part of its culture.

2.     Human staff participation and modifications of organization chart in corporate governance adoption are necessary.

3.     Updating the legislation to achieve the first recomondation.

4.     Computerizing the activities and the works of the Municipality to improve the accountability and transparency and facilitating the implementation of corporate governance.

About the researchers:

-         Othman M. Ghnaim, is associate professor in the department of regional planning of Balq'a Applied University in Jordan, he has more than fifteen years experience.

-         Radwan M. El-Anati is assistant professor in the accounting department of Zarqa' Private University in Jordan , he has more than eighteen years experience.

References:

-         Department of Statistics m Annual Statistical , 2004, Dep. of Statistics., Amman, 2004.

-          Mari Maanonen, Tempere university diissertation,2007, http:actu.uta.fi

-         Navrbjerg steenm between participation and codetermination – new forms of cooperation in Municipalities and countries, www.nyt-om-arbejdsliv.dk/ta05-3-101 pdftc,21/08/2007.

-         Pretoria/Moleketi, Governance and Administration cluster media, http:/64.233.167.104 Search?9=cache:Tvw559djpHoJ:unpanl.un.org./intradoc/groups/public/docu,21/08/2007.

-         Tladi Nohayaze, Developing Skills and Competencies to implement corporative governance in free state Municipalities, www.fs.gov.za/information/document,21/08/2007.