Final Project Work

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KWAME NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

COLLEGE OF ARCHITECTURE AND PLANNING

FACULTY OF PLANNING AND LAND ECONOMY

DEPARTMENT OF PLANNING

THE BENEFITS AND CHALLENGES OF THE DISTRICT ASSEMBLY

COMMON FUND ON THE DEVELOPMENT OF THE KWAHU-SOUTH

DISTRICT

BY:

AMPADU FORSTER (71291-04)

JUNE, 2008.

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THE BENEFITS AND CHALLENGES OF THE DISTRICT ASSEMBLY

COMMON FUND ON THE DEVELOPMENT OF THE KWAHU-SOUTH

DISTRICT

A special study submitted to the Department of Planning Kwame Nkrumah

University of Science and Technology, Kumasi in partial fulfilment of the

requirements for the Degree of Bachelor of Science in Planning.

By

FORSTER AMPADU

JUNE, 2008

SUPERVISOR:

Signature: ……………………………. Signature: …………………….

Name: Mr. Clifford Amoako Name: Dr. K. D. Kessey

Head, Department of Planning

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ABSTRACT Government in its efforts to ensure nationwide development decentralised it’s

political, administrative and fiscal power to district assemblies and to empower them

financially introduced a statutory allocation of 7.5% of annual national income

towards the districts’ development.

The pre-institutionalisation period of the District Assembly Common Fund saw

districts develop through funding from their internally generated funds and

government transfers which were not always available and adequate. With the

introduction of the DACF, it has served as a major source of revenue to district

assemblies currently forming almost 50% of the revenue base of district assemblies.

The introduction of the DACF helped in spreading development throughout the entire

district. For the purpose of this study, efforts were made at establishing the benefits

and constraints of the DACF with the Kwahu-South District Assembly (KSDA)

serving as the focal district.

This was to know the problems facing the DACF in the district, the amount released

towards the district’s development and to allow stakeholders express opinions as to

the way forward for the DACF. Since Internally Generated Fund play a major role in

local development financing, the study tries to establish the revenue capacity of the

district.

Data was collected using structured questionnaire with the assembly members and the

district assembly serving as the source of primary data. Secondary data consists of

articles relating to the administration of DACF in the district, The Medium Term

Development Plan of the district, financial reports and other bulletins. Data collected

is presented and analysed with output presented in the form of tables and graphs for

easy understanding.

Primary and Secondary data collected brought forth various issues concerning the

administration and usage of the DACF in KSDA. Utilization of the DACF in the

KSDA follows a laid down procedure of selecting the project to be undertaken from

the MTDP to ensure that the needs of the district are kept as topmost priority.

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Selection is done by a committee selected from within all stakeholders in the district

before the project costing is done through market survey. This ensures transparency in

the project selection and implementation.

The DACF faces a number of problems including the untimely release of fund to the

district and inadequacy but notwithstanding these problems, the people have benefited

in various sectors including education, health, water and sanitation and in the field of

general infrastructural development which has improved the standard of living of the

people.

The aforementioned problems can be dealt with thus recommendations were made to

government to try as much as possible to release the district’s share on time to help

the district meet its budget. Government can also desist from deducting various sums

of money at source without informing the district but if these deductions are statutory,

the assembly can be informed earlier for budget adjustment.

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ACKNOWLEDGEMENT

First and foremost I give thanks to The Almighty God for giving me life to carry out

this study; without Him all these would have been just a dream. I also express my

sincere gratitude to my supervisor; Mr. Clifford Amoako a lecturer at the Department

of Planning KNUST for going through all the pains to vet my work chapter after

chapter and rendering pieces of advice which all contributed to the success of the

work.

I also render my gratitude to my beloved parents Mr and Mrs Ampadu for their

support throughout my entire educational ladder to this height; without them I would

not be where I am today. May God bless you mom and dad and reward you in

abundance for every dime spent on me. I also appreciate the support rendered to me

by my brothers Fred, Ernest, Felix and my beloved sister Vera.

This study would not have been a success without the help of friends who stood by

me through hard times to ensure the work’s success. To Sheila, Adusei, Nii,

Richmond, Oyeba, Ntibrey, Cephas, Adu Asare, Patrick, Mustapha, Paa Kwasi I say

thank you and may God Richly bless you all for your efforts.

Finally my greatest appreciation goes to Mr. Kudjovi the Budget Officer of the

Kwahu-South District Assembly for providing me with all the support I needed in

term of data on my study without which this piece of work would have been

meaningless.

To the authors whose materials were used in the write up; I say thank you very much

and wishing you all the best in your endeavours.

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TABLE OF CONTENTS

ABSTRACT ........................................................................................................... iiii

ACKNOWLEDGEMENT ....................................................................................... v

TABLE OF CONTENTS ....................................................................................... vi

LIST OF TABLES ................................................................................................. ixi

LIST OF FIGURES ................................................................................................ ix

CHAPTER ONE: ESTABLISHMENT OF THE DACF: PROBLEMS AND PROSPECTS ........................................................................................................... 1

1.1 Introduction .................................................................................................... 1

1.2 Problem Statement ......................................................................................... 2

1.3 Research Questions ........................................................................................ 3

1.4 Objectives ....................................................................................................... 3

1.5 Scope of the Study .......................................................................................... 3

1.6 Approach and Methodology .......................................................................... 3

1.6.1 Research Design: ....................................................................................... 4

1.6.2 Mode of Data Collection and Source .......................................................... 4

1.6.3 Sampling ................................................................................................... 4

1.6.4 Data analysis and Reporting ....................................................................... 5

1.7 Limitations ...................................................................................................... 5

CHAPTER TWO: FINANCING DECENTRALISED DEVELOPMENT IN GHANA: KEY ISSUES AND CONCEPTUAL FRAMEWORK .......................... 6

2.1 Introduction .................................................................................................... 6

2.2 Local Economic Development (LED) ............................................................ 6

2.3 Concept of Decentralisation ........................................................................... 6

2.3.1 Definitions ................................................................................................. 6

2.3.2 Conditions Necessary for Successful Decentralisation................................ 9

2.3.3 Merits and Demerits of Decentralisation .................................................. 10

2.3.4 Constraints of Decentralisation ................................................................ 12

2.4 Decentralisation in Ghana .......................................................................... 13

2.4.1 Merits of Decentralisation in Ghana ......................................................... 15

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2.4.2 Constraints on Democratic Local Governance in Ghana ........................... 16

2.5 Financing Local Development ..................................................................... 18

2.5.1 Ceded Revenue ........................................................................................ 18

2.5.2 Internally Generated Fund (IGF) .............................................................. 19

2.5.3 HIPC Fund............................................................................................... 19

2.5.4 Ghana Education Trust Fund (GETFund) ................................................. 23

2.5.5 Non-Governmental Organizations (NGOs) and other Agencies ................ 24

2.5.6 Problems Associated with the Internally Generated Funds ....................... 25

2.6 The Institutionalisation of the District Assemblies Common Fund (DACF)

............................................................................................................................ 26

2.6.1 Formula for Disbursement ....................................................................... 28

2.6.2 Problems Faced by the Common Fund ..................................................... 29

2.7 Decentralization and Development .............................................................. 30

2.8 Summary of the Chapter ............................................................................. 31

CHAPTER THREE: THE BENEFITS AND PROBLEMS OF DACF IN KWAHU-SOUTH .................................................................................................. 32

3.1 Introduction .................................................................................................. 32

3.2 Profile of the Kwahu-South District ............................................................ 32

3.2.1 Location and Size .................................................................................... 32

3.2.2 Relief, Climate, Vegetation and Soils ....................................................... 34

3.2.5 Demographic Characteristics ................................................................... 34

3.3 Traditional Sources of Revenue ................................................................... 36

3.4 The District Assemblies’ Common Fund (DACF) ...................................... 39

3.4.1 District’s Share ........................................................................................ 39

3.4.2 Pattern of Releases ................................................................................... 40

3.4.3 Adequacy and Equitability in Sharing ...................................................... 41

3.4.4 Comparison of IGF and DACF ................................................................ 42

3.5 Project Selection and Approval Process ...................................................... 44

3.5.1 Project Costing ........................................................................................ 45

3.5.2 Contract Awarding Process ...................................................................... 45

3.5.3 Projects Initiated with DACF in the District ............................................. 46

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3.5.4 Management of Completed Projects ......................................................... 50

3.6 Impact of Projects ........................................................................................ 50

3.7 Problems Facing the DACF in the Kwahu-South District .......................... 50

CHAPTER FOUR: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION ...................................................................................................... 52

4.1 Introduction .................................................................................................. 52

4.2 Summary of Findings ................................................................................... 52

4.2.1 Traditional Sources .................................................................................. 52

4.2.2 Pattern of Releases ................................................................................... 52

4.2.3 Project Selection and Approval Process ................................................... 53

4.2.4 Costing and Contract Awarding Process .................................................. 53

4.2.5 Impacts of Projects................................................................................... 53

4.3 Implication of Findings ................................................................................ 53

4.3.1 Traditional Sources .................................................................................. 53

4.3.2 Pattern of Releases ................................................................................... 54

4.3.3 Project Selection and Approval Process ................................................... 54

4.3.4 Costing and Contract Awarding Process .................................................. 54

4.3.5 Impact of Projects .................................................................................... 55

4.4 Recommendations ........................................................................................ 55

4.5 Conclusion .................................................................................................... 56

BIBLIOGRAPHY .................................................................................................. 58

SAMPLE QUESTIONNAIRE .............................................................................. 60

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LIST OF TABLES TABLE PAGE

2.1: Number of HIPC Projects executed by District Assemblies 20

2.2: Allocation of HIPC Fund by functional classification 22

2.3: Factors used in the current DACF disbursement formula 28

3.2: Age Structure by District/National (%) 35

3.3: Internally Generated Fund 38

3.4: District’s Share of DACF 39

3.5: Views of Assembly Members on the Adequacy and

Equitability in the Sharing of the DACF 41

3.6: Revenue Changes between IGF and DACF 43

3.7: DACF On-going Projects in the District 48

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LIST OF FIGURESFIGURE PAGE

2.1: Benefits of Financing Decentralised Development 30

2.2 Sources of Revenue of District Assemblies – 2006 31

3.1: Kwahu-South District in National and Regional Context 33

3.2 Internally Generated Fund Inflows 38

3.3: Views of Assembly Members on the Adequacy and

Equitability in the Sharing of the DACF 41

3.4: Trend of Inflows between IGF and DACF 44

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CHAPTER ONE ESTABLISHMENT OF THE DACF: PROBLEMS AND PROSPECTS

1.1 Introduction Every society aims at putting in place mechanisms to help in the development of the

inhabitants and the society as a whole. The development can be in the form of

infrastructural development like the construction of roads, provision of educational

facilities and others. Societal development and popular participation in governance is

enhanced by decentralization. (Asante and Ayee,2000)

The 1992 Constitution and the various legislation on decentralization articulate the

explicit objectives of decentralization such as empowerment, participation,

accountability, effectiveness, efficiency, responsiveness, decongestion of the national

capital and the stemming of the rural-urban drift. Specifically, the Constitution and

the legislation show the decentralisation programme has been designed to;

Devolve political and state power in order to promote participatory democracy

through local institutions;

Devolve administration, development planning and implementation to the

District Assemblies (Local Government units);

Introduce and effective system of fiscal decentralization, which gives the

District Assemblies control over a substantial portion of their revenues.

(Module A, 2003)

Decentralization can lead to severe imbalances in the regional distribution of wealth

and development, as the resources of local authorities are often unequal. This explains

why, and in view of the problems most of the District Assemblies face in generating

their own revenues to meet their financial commitments and to give effect to the

Decentralisation programme, there was the need for the setting up of the District

Assemblies’ Common Fund. Article 252 of Ghana’s 1992 Constitution provided for

the setting up of a DACF to serve as a mechanism for the transfers of resources from

the central government to the local authorities. The Article provides that 7.5% of

Ghana’s total revenue should be paid into the Fund for distribution to these local level

authorities, mainly to undertake development projects and some specific programmes.

(King et al, 2003)

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Simply the District Assemblies’ Common Fund (DACF) is seen as a pool of resources

created under section 252 of the 1992 Constitution of the Republic of Ghana. It is a

minimum of 7.5% of the national revenue set aside to be shared among all District

Assemblies in Ghana with a formula approved by parliament. The fund is a

development fund which enables the use of the nation’s wealth throughout Ghana to

the benefit of all citizens.

The District Assemblies’ Common Fund was instituted mainly to ensure equitable

distribution of the nations scarce resources to ensure development in every part of

Ghana (Ayee, 1995). The common fund website lists the following as the other

purposes for establishing the District Assemblies’ Common Fund;

· To improve housing schemes · To strengthen decentralization and promote Sustainable self-help development. · To make up development deficiencies in deprived communities · To improve upon primary health care delivery in all parts of Ghana · To improve on the country’s educational facilities to ensure quality education

1.2 Problem Statement Before the institutionalisation of the District Assemblies’ Common Fund (DACF),

district sought to their internally generated funds in carrying out development projects

in the respective districts. This practice affected districts whose internally revenue

base was very small thus depriving them of basic services like good drinking water,

electricity, good roads and a host of others. With a low revenue base, districts were

forced to develop particular communities like district capitals at the detriment of other

communities in the various districts and this led to the over concentration of facilities

in particular communities. In addition, districts also received a share of the country’s

revenue in the form of development only when the sitting government deemed it

necessary.

The institutionalisation of the DACF has made it possible for district assemblies to

carry out their own development activities since there is specific amount designated to

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all district assemblies. These monies are supposed to be readily available to the

district assemblies since it is a constitutional requirement of the government to make

available 7.5% of national income yearly to district assemblies to carry out their own

prioritised development projects.

1.3 Research Questions The study seeks to find answers to the following questions:

Is the District Assemblies Common Fund still necessary?

Are the monies released to the district assembly enough to support the

developmental projects of the district?

Are the monies released to the district assemblies on time?

Is the District Assemblies Common Fund well administered?

1.4 Objectives The main objectives of the study are to:

Identify the problems facing the District Assemblies Common Fund

administration and its operations.

know the amount released to the Kwahu South District Assembly (KSDA)

since the institutionalisation of the DACF

Know the internal revenue capacity of the KSDA which supplement the

activities of the DACF.

Identify the major challenges faced by the DACF in the KSDA.

1.5 Scope of the Study The study looks into the constraints and benefits of the DACF on the Kwahu-South

District Assembly. Issues being discussed include amounts received, major problems

faced by the DACF in its administration and utilization in the district as well as

various projects initiated with the DACF and to establish the benefits citizens of the

district derive from them.

1.6 Approach and Methodology To arrive at the most authentic and reliable way of solving a problem one has to make

appropriate use of research methods and instruments. In view of this and the success

of this research work, the main methods to be used are outlined below:

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1.6.1 Research Design: The design to be used for this study will be a case study since a particular district is

being selected to know the benefits and challenges of the DACF since not every

district can be captured for the study

1.6.2 Mode of Data Collection and Source Primary and secondary qualitative and quantitative data will be used for the study.

Primary data will be collected using mainly structured questionnaires and the main

source of primary data will be the elected assembly members of the entire district.

Also there will be structured questionnaires to be administered to institution mainly

the district assembly.

Secondary data will be sought from project reports of the KSDA, Medium Term

Development Plans, articles, annual financial reports on the administration of the

DACF in the Kwahu-South District Assembly.

1.6.3 Sampling Sampling gives the probability of collecting information from all parties or

stakeholders in any study, there is therefore the need to establish the sample size to be

used in the collection of data in relation to this study.

There are 51 assembly members in the district who will form the sample frame for the

study by adopting the formula “S = [N/(1+Ne2)]

Where S is the sample size

N = Sanple frame

e = error margin

In calculating the sample size, an error margin of 0.8 is being adopted thus;

Sample Size = [51/(1+51(0.08)2]

= 51/1.3264

= 38.

Therefore 38 assembly members are to be interviewed for the study by selecting the

34 elected members of the assembly and by simple random sampling method, select

the additional 4 from the government elected members to be interviewed.

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1.6.4 Data analysis and Reporting Data from primary sources will be coded using Statistical Package for Social Science

(SPSS) and presented in tables and diagrams (graphs) to make it easier to understand.

Data from discussion and institutions will also be presented in summaries and tables

where necessary.

1.7 Limitations There is no activity without problems and this study is not an exception. A few

problems were encountered during the activity which include time factor. There was

also the difficulty in getting the required data to carry out the study which at certain

times put the researcher in a tight position to meet deadlines.

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CHAPTER TWO

FINANCING DECENTRALISED DEVELOPMENT IN GHANA: KEY ISSUES AND CONCEPTUAL FRAMEWORK

2.1 Introduction This chapter primarily attempts to look into what other authors have written

concerning financing development at the local level in the decentralized system.

Documents from government, individuals, organizations and agencies as well as

groups of individuals will serve as the main source of information in this chapter

which will help in comparing the views of the various authors to be able to draw out

their common fronts and contrasting views. It is based on these inferences that

judgements can be made in relation to local level financing.

2.2 Local Economic Development (LED) Local Economic Development (LED) is a process of strategic planning through

partnerships between local government, the business community and NGOs (USAID,

2007). Its objectives are to stimulate investments that will promote sustained high

growth in a local community. LED focuses on a region’s potential and identifies

specifically what local stakeholders can and need to do to ensure their local

community reaches its potential. In this context, Local Economic Development

assesses a community’s comparative advantage, identifies new or existing market

opportunities for businesses, and reduces obstacles to business expansion and

creation. LED activities should have an impact on the economic viability of the entire

city and surrounding region not just a particular sector of the local economy.

2.3 Concept of Decentralisation

2.3.1 Definitions Decentralisation is seen as the transfer of power from a central government to

subordinate authorities (Encarta 2007). Asante and Ayee (2000) in their book

“Decentralisation and Poverty Reduction” sees decentralisation as a strategy that will

bring service delivery closer to consumers, improve the responsiveness of the central

government to public demands and thereby reduce poverty, improve the efficiency

and quality of public services and empower lower units to feel more involved and in

control”. They go on to say that decentralisation is thus linked to the concept of

subsidiarity, that is, making decisions at the lowest feasible level.

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Barnett, Minis et. al (1997), define decentralisation is the transfer of authority,

responsibility, and accountability from central to local governments. Based on these

definitions, it can be induced that decentralisation involves the designating of power

from a broader perspective to a more narrow entity to help in carrying out various

activities. This can help in the performance of such activities to perfection since the

smaller unit or government is in direct contact with the populace being governed.

The World Bank, (2000) groups decentralisation into; political decentralisation,

administrative decentralisation, fiscal and market decentralisation. Each type takes

place under different circumstances and this is explained below:

Political decentralisation: This means the establishing and empowerment of local

government structures, demarcation of administrative boundaries and the promotion

of popular participation of the people at the various levels of decision making.

Advocates of this type of decentralisation assume that decisions made with greater

participation will be better informed and more relevant to diverse interests in society

than those made only by national political authorities (Crawford, 2004).

Political decentralisation aims to give citizens and their elected representatives more

power in public decision making. It is often associated with pluralistic politics and

representative government, but it can also support democratization by giving citizens

or their representatives more influence in formulating and implementing policies.

Advocates of political decentralisation assume that decisions made with greater

participation will be better informed and more relevant to diverse interests in society

than those made only by national political authorities. The concept implies that the

selection of representatives from local electoral jurisdictions allows citizens to better

know their political representatives and allows elected officials to better know the

needs and desires of their constituents. Political decentralisation often requires

constitutional or statutory reforms, development of pluralistic political parties,

strengthening of legislatures, creation of local political units, and encouragement of

effective public interest groups. World Bank( 2000)

Judging from the definitions stated above, political decentralisation is investing power

in local government bodies to perform various governance duties on behalf of the

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central government. Local government bodies thus serve as a moderator between the

central government and the local communities.

Administrative decentralisation: World Bank (2000) defines administrative

decentralisation as redistributing authority, responsibility, and financial resources for

providing public services among different levels of government. It is the transfer of

responsibility for planning, financing, and managing certain public functions from the

central government and its agencies to field units of government agencies, subordinate

units or levels of government, semi-autonomous public authorities or corporations, or

area wide, regional, or functional authorities.

Administrative decentralisation therefore can be seen as the re-location of branches of

the central state to local areas, entailing a transfer of powers to locally-based officials

who remain part of, and upwardly accountable to, central government ministries and

agencies

Fiscal decentralisation: This type of decentralisation relates to the division of fiscal

responsibilities between central and local governments and the transfer of some well-

defined financial resource mobilization and disbursement responsibilities from the

former to the latter. This type of decentralisation seeks to make adequate financial

resources available to the local governments and ensures a system of financial

relations that would grant the local governments substantial discretion in allocating of

expenditures. Fiscal decentralisation can take many forms, including:

• Self-financing or cost recovery through user charges

• Co-financing or coproduction, in which users participate in providing services and

infrastructure through monetary or labour contributions

• Expansion of local revenues through property or sales taxes or indirect charges

• Intergovernmental transfers of general revenues from taxes collected by the central

government to local governments for general or specific uses

• Authorization of municipal borrowing and mobilization of national or local

government resources through loan guarantees. (World Bank, 2000)

Judging from these definitions, it is evident that to attain a strong political and

financial base of any entity, authority has to be decentralized among smaller entities

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with each entity having a defined jurisdiction to manage. This will ensure perfect

administration, management and effective utilization of scare resources.

2.3.2 Conditions Necessary for Successful Decentralisation Although politics is the driving force behind decentralisation in most countries,

decentralisation may be one of those happy instances in which good politics and good

economics serve the same end. The political objectives of increased political

responsiveness and participation at the local level can coincide with the economic

objectives of better decisions about the use of public resources and increased

willingness to pay for local services. At least five conditions are important for

successful decentralisation:

The decentralisation framework must link, at the margin, local financing and

fiscal authority to the service provision responsibilities and functions of the

local government, so that local politicians can deliver on their promises and

bear the costs of their decisions. (World Bank, 2000)

Local communities must be informed about the costs of services and delivery

options and the resource envelope and its sources, so that the decisions they

make are meaningful. Participatory budgeting, as used in Porto Alegre, Brazil,

is one way to create this condition. Communities need a mechanism for

expressing their preferences in a way that is binding on politicians, so that

there is a credible incentive for people to participate. (United Nations

Population Fund, 2000)

There must be a system of accountability based on public and transparent

information that enables communities to monitor the performance of the local

government effectively and to react appropriately to that performance, so that

politicians and local officials have an incentive to be responsive.

The instruments of decentralisation—the legal and institutional framework,

the structure of service delivery responsibilities, and the intergovernmental

fiscal system must be designed to support the political objectives. (World

Bank, 2000).

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2.3.3 Merits and Demerits of Decentralisation Decentralisation has a lot of benefits and these benefits can be broadly classified as

improved efficiency and effectiveness, governance and/or equity. Proper

decentralisation can therefore result in:

Improved governance because if people see that their interactions with elected

decentralized governments will lead to decisions that are more consistent with

their wishes than those made by higher levels, they feel better connected to

decentralized governments. Being able to influence public affairs in at least

some modest ways that directly affect them and empowers people, giving

them a new sense of control and autonomy.

Improved efficiency because decentralized governments are said to be closer

to the people, have good access to local information and understand local

context well. If so, they can better identify the mix and level of services that

their constituents need than can the higher-levels, thus improving allocative

efficiency.

Improved equity because if decentralized governments are familiar with local

circumstances, they may be in the best position to more equitably distribute

public resources and target poverty within their own jurisdictions.

Improved responsiveness of government because local representatives are best

placed to know the exact nature of local needs and how they can be met in a

cost-effective way.

Enhanced accountability because local representatives are more accessible to

the populace and can thus be held more closely accountable for their policies

and outcomes than distant national political leaders (or public servants).

Political equality from greater political participation will reduce the likelihood

of the concentration of power. Political power will be more broadly distributed

thus making decentralisation a mechanism that can meet the needs of the poor

and disadvantaged.

Training in political leadership creates a seedbed for prospective political

leaders to develop skills in policy-making, political party operations and

budgeting with the result that the quality of national politicians is enhanced.

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Though there are a lot of demerits associated with decentralisation these are serious

drawbacks that need to be considered when designing decentralisation programme.

Some of the demerits of decentralisation can be given as:

Firstly, decentralisation in practice runs up against objections at a political

level. Indeed, it is felt that decentralisation dislocates the nation, either by

encouraging the appetites of certain regions for autonomy or by encouraging

wealthier regions to operate as self-sufficient territories to the detriment of

poorer regions (Smith, 1985).

Secondly, as the wealth of a country is unfairly distributed, decentralisation is

likely to accentuate the already precarious imbalance within the state because

the poor districts would tend to become even poorer. For poor districts and

regions, therefore, autonomy would be void of meaning because they would

continue to be dependent on the state. Moreover, decentralisation is not always

compatible with planning policies and strategic development projects

(Nzouankeu, 1994).

Thirdly, decentralisation can lead to increased waste and squandering of

public funds. The inexperience of locally elected representatives, the fact that

they have received little or no training and the idea that the political ambitions

of local politicians will lead to lend more importance to their electoral

preoccupation in preference to the interest of the people. Although it must be

said that there is an element of truth in certain of these objections, it should not

be forgotten that waste is not confined to decentralized units and that the

central government is also guilty of waste, often to a greater extent than

decentralized authorities (Smith, 1985).

Fourth, decentralisation is not necessarily linked to democracy because the

devolution of power may help to augment the dominance of those who,

because of wealth or status, are already powerful at the local level. In other

words: it is conceivable, even likely in many countries, that power at the local

level is more concentrated, more elitist and applied more ruthlessly against the

poor than at the centre. As a consequence, therefore, greater decentralisation

does not necessarily imply greater democracy let alone power to the people –

it all depends on the circumstances under which decentralisation occurs

(Griffin, 1981).

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Fifth, decentralisation might be accompanied by more corruption. If, as is

likely, corruption is more widespread at the local level than at the national

level, then decentralisation automatically increases the overall level of

corruption. This outcome, by the way, might not be bad in terms of

redistribution, because the “benefits” of decentralized corruption are probably

better distributed than the benefits of centralized corruption. But it would

certainly increase the costs in terms of allocative efficiency, because it leads to

the supply of services for which the levels of kickbacks are higher (rather than

those for which there is a demand). It is also costly in terms of production

efficiency, because it leads to corruption-avoiding strategies that increase

costs, favour ineffective technologies, and waste time (Prud’homme,1995).

2.3.4 Constraints of Decentralisation Effective decentralisation is being faced with a number of factors which affects the

process negatively and thus results in deviation of the main objectives of

decentralisation. These factors include:

Insufficient capacity and/or resource: In some countries, decentralisation of

responsibilities has been overzealous and decentralized units are either too

small or too under-resourced to take on their obligations. This is often

characterized by insufficient staff, inadequate training, and poor management

as well as insufficient management systems and procedures (United Nations

Population Fund, 2000). This hinders the process of decentralisation since it

requires resources to run smoothly to achieve the intended goal for

decentralizing.

Instability in the political framework: It has been noted that there has been

considerable instability in the political and legal framework for

decentralisation among countries like Bolivia and Ghana, where successive

governments with different political philosophies have destabilized the

decentralisation process by passing contradictory laws (United Nations

Population Fund, 2000).

Decentralisation occurring too quickly: If decentralisation occurs too quickly,

the organizational structures, roles and responsibilities may be inadequately

defined, creating structural imbalances in the political system. When this

happens it causes central government to feel reluctant to share power or

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relinquish power and authority. When this happens, sub-national governments

also tend to resent the fact that they are made responsible for service delivery

without the necessary resources.

2.4 Decentralisation in Ghana The history of decentralisation is traced back to the introduction of indirect rule by the

British authorities in 1878 lasting until 1951 (Acheampong, 2006). During this period

the colonial administration ruled indirectly through the native political institution (that

is the chiefs), by constituting the chief and elders in a given district as the local

authority, with powers “to establish treasuries, appoint staff and perform local

government functions”.

Since gaining independence in 1957, successive governments in Ghana have looked

to a vibrant local government system to aid the country’s development. Attempts at

decentralisation were introduced, for instance, in 1974 under the military regime of

Lt. Col. Acheampong and again in 1983 under Rawlings’ military rule (Crawford,

2004). In 1983, Rawlings’ PNDC government announced a policy of administrative

decentralisation of central government ministries, alongside the creation of People’s

Defence Committees (PDCs) in each town and village. The PDCs, made up of local

PNDC activists as self-identified defenders of the ‘revolution’, effectively took over

local government responsibilities, though often limited to mobilising the

implementation of local self-help projects while the de-concentrated ministries played

a more significant role (Nkrumah, 2000). Ayee (2000) notes that despite the PNDC’s

populist rhetoric, its interest in decentralisation reflected that of previous regimes, that

is, an interest in the administrative decentralisation of central government and not the

devolution of political authority to the local level.

Ghana’s current programme of decentralisation was initiated in 1988 when the PNDC

government introduced the Local Government Law (PNDC law 207), through which

the number of local authorities, then 65, was reviewed and reorganised into 110

district assemblies. The stated aim of the local government reform was to transfer

functions, powers, means and competences from the central government to the local

government, and to establish a forum at the local level where a team of development

agents, representatives of the people and other agencies could discuss the

development problems of the district and/or area and their underlying causative

14

factors (Crawford, 2004). On an ideological level decentralisation was expected to

support democratic participatory governance, improve service delivery and also lead

to a rapid socio-economic development (Acheampong, 2006)

The process of decentralisation continued and was endorsed by The National

Democratic Congress (NDC) government that came into power in 1993. It

consolidated the aim of decentralisation within the new framework of liberal

democratic constitution. Although, it must be noted, essential democratic elements in

the constitution remained compromised.

To promote the decentralisation efforts, the then Ministry of Local Government, Rural

Development and Employment (MLGRD&E) developed and implemented a National

Decentralisation Action Plan (NDAP), which was endorsed by the cabinet in February

2004. (Acheampong, 2006) outlines the plan, which was implemented from 2003-05,

to be geared towards;

strengthening political leadership and inter-sectoral collaboration

enhancing policy management, implementation and monitoring

consolidating funding

strengthening financial and human resource management

strengthening functional and governance performance of the district

assemblies

strengthening sub-district governance

promoting participation and partnerships

Also, in 2004 the government further reviewed the number of assemblies, creating 28

new ones in order to advance decentralisation. Thus, there are all together 138 district

assemblies in Ghana. In the quest of government to help improve on decentralisation

system in Ghana, 26 new district assemblies were created in 2007 bringing the total of

district assemblies to 166 as at 2008.

15

2.4.1 Merits of Decentralisation in Ghana (Ayee, 2000) looks into the benefits Ghana derive from practicing decentralisation

which include;

1. Improved local economic development and poverty reduction through (a)

providing services that serve as production and distribution inputs for local

firms and entrepreneurs; (b) contributing to a legal and institutional

environment that is conducive for development; (c) coordinating key local

public, private and community actors in creating partnerships that promote

development.

2. Decentralisation in Ghana vests power to the district assemblies as the

political authority to perform various roles which includes;

To give political and administrative guidance, give direction and to supervise

all other administrative authorities in the District;

To exercise deliberative, legislative and executive functions;

To be responsible for overall development of the District and ensure the

preparation of (a) development plans of the District, and (b) the budget of the

District related to the approved plans;

Effective mobilisation of the resources necessary for overall development of

the District;

Promotion of productive activity and social development;

To co-ordinate, integrate and harmonize the execution of programmes and

projects under approved development plans for the district and other

development programmes promoted or carried out by Ministries,

Departments, Public Corporations and other Statutory Bodies and Non-

Governmental Organisations in the District.

3. Improved governance because if people see that their interactions with elected

decentralized governments will lead to decisions that are more consistent with

their wishes than those made by higher levels, they feel better connected to

decentralized governments. Being able to influence public affairs in at least

some modest ways that directly affect them and empowers people, giving

them a new sense of control and autonomy.

4. Improved efficiency because decentralized governments are said to be closer

to the people, have good access to local information and understand local

context well. If so, they can better identify the mix and level of services that

16

their constituents need than can the higher-levels, thus improving allocative

efficiency.

5. Improved equity because if decentralized governments are familiar with local

circumstances, they may be in the best position to more equitably distribute

public resources and target poverty within their own jurisdictions

Also decentralisation helps in the proper utilization of funds since the district

assemblies which carry out development activities on behalf of the central

government know the priorities of the district thus tries to prevent conflict of interest.

Project maintenance is also enhanced when the needs and aspirations of the district

are met and this can only be ensured when decentralized bodies are well laid down

(Acheampong, 2006).

2.4.2 Constraints on Democratic Local Governance in Ghana Despite the many merits of decentralisation in Ghana, there are a number of problems

associated with it;

Local Government Autonomy: Despite the adherence to the rhetoric of

decentralisation, the political commitment of national governments to the

devolution of power to local governments is often limited, disinclined to lose

power themselves. The autonomy of the local government is compromised and

undermined in a number of ways, indicating that central government controls

remains very real. This is because the appointment of thirty percent of District

Assembly members and of the District Chief Executive leaves a significant

democratic deficit, with the appointment system encouraging upward

accountability to central government rather than the local electorate. Central

government departments maintain a close administrative and financial eye on

local government activities. The National Development Planning Commission

and the Ministry of Finance respectively examine the district development

plan and the annual budget (Nkrumah 2000). Additionally, any recruitment

into the service of the DAs has to be done either through the National Civil

Society or agreed by the relevant central government body (Crawford, 2004).

Fiscal Independence: There is still reliance on the central government in

financing of projects in the district assemblies. The responsibilities of the local

17

government over weighs their financing capacities so they are left with only

one option; seek other sources of funding from central government. This

deviates from the concept of decentralisation, especially, fiscal

decentralisation. In 2006, out of ¢1,728,919,000,000 being total revenue

accruing to district assemblies in Ghana, central government transfers alone

constituted 86% (¢1,484,197,000,000) (Government of Ghana, 2007b). The

remaining 14% was made up of internally generated fund which is woefully

inadequate to meet the district assemblies’ development projects.

Capacity of District Level Government: The decentralisation of decision-

making and public service provision in specified areas entails a related rise in

public expectations of local government. Yet a common problem is that

existing local government structures do not have the necessary capacity to

undertake new and expanded responsibilities. A public opinion survey

conducted in 1999 discovered that citizens were more likely to consult

traditional chiefs, faith-based leaders and other notables than go to local

government representatives or public officials, while only 56% of respondents

were satisfied with the performance of local government representatives

compared with 65% with traditional chiefs (Bratton et al. 2001). Thus,

capacity building of district level institutions is clearly essential if the

legitimacy of democratic local governance is not to be undermined. This

inability results in the deviation from the concept of decentralisation.

Inclusion and Participation: “Popular and local participation in local decision-

making” is explicitly stated in the Constitution as an objective of

decentralisation in Ghana (Government of Ghana, 1992) but this is not

evident to some extent at the various district assemblies. This is so because

participation is restricted to a particular subset of the population, with others

relatively excluded (Nkrumah, 2000).

18

2.5 Financing Local Development All the decentralized bodies provide funds for carrying out their development projects

through various sources but the most common ones can be mentioned as Ceded

revenue and their own revenue generating power through local taxation (Internally

Generated Fund) (Crawford, 2004). In recent times other sources of financing local

development have been drawn in the context of HIPC fund, European Micro Projects,

Social Investment Fund, Grants from development partners, Non-Governmental

Organizations (NGOs), GETFund and a host of others. Some of the sources

mentioned have been looked into by various authors and has been seen to contain a lot

of components that make up the various compound names given.

2.5.1 Ceded Revenue This is revenue from a number of lesser tax fields that central government has ceded

to the District Assemblies. Ceded is collected by the Ghana Internal Revenue Service

(IRS) but then transferred to District Assemblies via the Ministry of Local

Government and Rural Development (Crawford, 2004). Crawford gives examples of

ceded revenue as entertainment duties, casino revenue, betting tax, advertisement tax

and others which have contributed quite a substantial sums to local governments.

According to Aberde (2001), the sources of ceded revenue as enshrined in Act 462

and include the following:

Entertainment duty under entertainment duty Act 1962 (Act 150)

Casino revenue under the Casino Revenue Tax Decree, 1973, (NRCD 200)

Betting tax under the gambling machines decree 1973 (NDRCD 1974)

Income tax (Registration of trade, business, profession or vocation) Law 1986

(PNDCL 158)

Income tax payable by specified categories of self-employed persons in the

informal sector.

Daily transport tax under the income tax amendment law, 1987 (PNDCL 177)

Advertisement Tax under the Advertisement Tax Decree, 1976 (SMCD 50)

19

2.5.2 Internally Generated Fund (IGF) Local authorities are not completely dependent on central government and do

themselves have some revenue-raising powers. (Crawford, 2004). The collection of

the internally generated revenue remains very low and constitutes only 14% of the

total revenue base of district assemblies (2006). Only two regions (Western and

Greater Accra) are able to generate internal revenue equivalent to a fifth of their total

revenue accruals. This reflects the weak capacities of district assemblies to generate

adequate revenue internally (Government of Ghana, 2007b). In 2006, the Ashanti

region recorded the highest amount of internally generated revenue of

¢55,628,000,000 whereas the Upper West Region recorded the lowest internally

generated revenue of ¢5,042,000,000 (Government of Ghana, 2007b).

2.5.3 HIPC Fund Government took the decision to access the Highly Indebted Poor Country (HIPC)

Initiative in March 2001. In February 2002, Ghana reached decision point and in July

2004, reached completion point. The total relief from the HIPC Initiative is US$3.7

billion, spread over a 20 year period. This amount represents the relief from Ghana’s

multilateral, bilateral and commercial creditors. (Government of Ghana, 2007a)

Though the HIPC Initiative was internationally driven, the process has been managed

internally and local priorities are what drive the disbursement and use of funds. The

use of HIPC funds has been guided by the poverty reduction and growth policies of

Ghana’s development framework – GPRS 1 and GPRS II, both of which acknowledge

that there can be very little poverty reduction without growth. (Government of Ghana,

2007b)

The HIPC fund for district projects are approved on the basis of the guidelines for the

utilisation of the HIPC fund and those for the preparation of District Development

Plans. HIPC projects executed directly by the Metropolitan, Municipal and District

Assemblies (MMDAs) fall within the stipulated areas of Education, Health, Water,

and Sanitation (Osei and Quartey, 2001).

20

The guidelines for the disbursement of HIPC specify three main areas of expenditure

a. Using 20% of the relief for interest payments on domestic debt. This

was a strategy designed to ease interest payments and thereby free

Government discretionary funding for the social sectors,

ii. Funding projects developed by sector Ministries, Departments and

Agencies (MDAs) for both poverty reduction and growth, and

iii funding specified projects submitted by Metropolitan, Municipal and

District

Assemblies (MMDAs). (Government of Ghana, 2007b)

The formula for calculating the HIPC Fund disbursement consistently has 20% for the

reduction of domestic debt and the remaining 80% for MDA and MMDA

programmes and projects. From 2002, variations to the composition of the 80% of the

proportion for MDA and MMDA programmes and projects has been dictated by the

annual national priorities with respect to poverty reduction and growth, determined by

Cabinet. For 2005 and 2006, the disaggregation of spending by sector has been

approved by Parliament. (Government of Ghana, 2007b)

From the above, it can be deduced that the HIPC Fund has a high proponent of

financing local development making inference of the number of projects undertaken

with the Fund. The number of projects are presented in table 2.1.

Table 2.1: Number of HIPC Projects executed by District Assemblies

Region No. Of

Education

Projects

No. Of

Health

Projects

No. Of

Water

Projects

No. Of

Sanitation

Projects

Total

Number of

Projects

Western 88 22 39 108 257

Central 111 37 26 93 267

Greater

Accra

36 23 1 20 80

Volta 135 32 22 87 276

21

Eastern 119 29 9 67 224

Ashanti 153 143 8 37 341

Brong Ahafo 205 34 12 67 318

Northern 199 34 17 90 340

Upper West 50 17 5 18 90

Upper East 43 27 5 35 110

Source: Government of Ghana, The Implementation of the GPRS II; Annual Progress

Report

HIPC-funded projects have as a result of guidelines developed to direct its

functioning, been targeted both at reducing poverty and enhancing growth of the

economy. From year 2002 to date, releases of HIPC funding comes to a total of

¢5,568.1 billion out of which domestic debt payments amounted to ¢966.3 billion

(Government of Ghana, 2007b). The remainder of the releases from HIPC has been

used by Ministries, Departments and Agencies (MDAs) and Metropolitan, Municipal

and District Assemblies (MMDAs) on human development sectors such as education

and health, water and sanitation; and on growth sectors, especially areas where the

poor participate most, such as agriculture, the informal sector, or areas from which the

poor stand to benefit from, such as micro finance. (Government of Ghana, 2007b).

The Fund allocation with respect to priority areas over the years (2002 – 2006) is

shown in table 2.2

22

Table 2.2: Allocation of HIPC Fund by functional classification

PRIORITY AREAS

2002 2003 2004 2005 2006 *

Amount

(¢bn)

Prop.

(%)

Amount

(¢bn)

Prop.

(%)

Amount

(¢bn)

Prop.

(%)

Amount

(¢bn)

Prop.

(%)

Amount

(¢bn)

Prop.

(%)

Domestic debt 81.4 29.80 144.0 29.80 301.4 16.13 398.6 20.98 48.96 6.30

Human Development

Services (Education, health, safe water,

sanitation etc)

120.84 44.24 396.68 54.19 837.52 44.83 528.54 27.82 344.75 44.29

Private sector development (Agriculture,

Energy, micro credit, small scale mining,

trade & industry, employment)

63.34 23.19 175.11 23.92 520.59 27.87 802.98 42.26 335.60 43.11

Governance (Information, Police, Fire

Service)

7.6 2.78 16.23 2.22 208.62 11.17 169.77 8.94 49.00 6.30

TOTAL 273.17 100 732.02 100 1868.13 100 1899.9 100 778.31 100

* 2006 figures up to June 2006 (Government of Ghana 2007, Press Briefing on use of HIPC Funds, Accra)

Making inference from table 2.2, substantial amount is allocated yearly to the

development of human services for example in 2006, ¢344.75 billion representing

44.29% of the total HIPC Fund for the year was allocated to the development of

human services (education, health, safe water, sanitation). This has a long term effect

of reducing poverty in the country; which is one of the main targets of the Fund.

Over the years, the private sector has proven to be one of the main actors in the

development of an economy and to help boost the efforts of the private sector, efforts

are being made to make resources available to the sector. This asserts to the allocation

of ¢335.60 billion of the HIPC Fund in 2006 to help develop the private sector. In

reducing poverty and enhancing economic growth also saw the allocation of monies

to the governance (¢49.00 billion in 2006) sector and the payment of domestic debts

(¢48.96 billion in 2006).

2.5.4 Ghana Education Trust Fund (GETFund) The Ghana Education Trust Fund (GETFund) was established by an act of Parliament

(Ghana Education Trust Fund Act, 2001 Act 581) on 25th August 2001 to assist

nationwide with financing of education; to provide for the management of funds and

for financial related matters. The Fund is under the management of a 17 member

Board of Trustees (GETFund, 2007)

The main objective of establishing the Fund as to provide finance to supplement the

provision of education at all levels by government. For the purpose of attaining this

objective, the monies from the Fund are to be expended as follows:

(a) To provide financial support to the agencies and institutions under the

Ministry of Education, through the Ministry, for the development and

maintenance of essential academic facilities and infrastructure in public

educational institutions particularly, in tertiary institutions;

(b) To provide supplementary funding to the Scholarship Secretariat for the grant

of scholarships to gifted but needy students for studies in second-cycle and

accredited tertiary institutions in Ghana; (c) To contribute monies from the Fund towards the operation of student loans

schemes for students in accredited tertiary institutions through loan scheme

mechanisms and agencies, approved by the Minister;

(d) To provide, through the National Council on Tertiary Education, grants to

tertiary institutions, To train brilliant students as members of faculties

To undertake research and other academic programs of relevance to

national development; and

(e) To provide monies to support such other educational activities and

programmes for the promotion of education as the Minister in consultation

with the Board may determine.

An amount of money, equivalent to two and half percent (2½%) of the prevailing rate

of the Value Added Tax is paid by the Value Added Tax Service to the Fund. This

serves as the major source of fund for the GETFund. Apart from this, there are other

sources which include:

Grants, donations, gifts and voluntary contributions from philanthropists,

development partners and other agencies with interest in the education sector;

Money that accrues to the fund from investments made by the Board of

Trustees of the Fund; and

Other monies or property that may be in any manner become lawfully payable

and vested in the Board of Trustees of the Fund.

Disbursement of monies is made through the Ministry of Education (MoE) and the

National Council for Tertiary Education (NCTE), the Scholarship Secretariat and the

Social Security and National Insurance Trust (GETFund, 2007)

2.5.5 Non-Governmental Organizations (NGOs) and other Agencies The origins of NGOs in Ghana dates far back into time, whereas a result of mutual

assistance the traditional Ghanaian idea of self help under the “nnoboa” system led to

the formation of church NGOs by the missionaries. The emergence and growth of

NGOs in Ghana was very slow at the beginning and by 1930 only three had been

officially registered. The number of NGOs increased steadily in the 1960s and 1970s

and by December 1996, more than 320 NGOs; both foreign and local were operating

in Ghana. Today, NGOs are springing up all over the place at a high rate. It is

impossible to say how many NGOs are operating in the country because the literature

on NGOs in Ghana is woefully inadequate. This handicap notwithstanding,

conservative estimates put the number of NGOs both local and foreign currently

operating in Ghana to be in the region of 900 to 1500. (Bob-Milliar, 2005).

According to the Government of Ghana document on the Implementation of the

GPRS II, the contribution of NGOs formed 11% of the revenue base of district

assemblies’ coffers. This is in the form of the various projects undertaken by these

NGOs to enhance the development activities of various assemblies. The roles played

by NGOs in Ghana cannot be over emphasized. As part of the measures aimed at

addressing the conditions of the people, and as a means to redress the imbalances

between rural and urban areas in terms of development, NGOs are playing a vital role

in that respect. Many NGOs are undertaking a number of activities in Agriculture,

Health, Education, Science and Technology, Research and most importantly women

development. In some deprived areas, the only important and very common names

known to the dwellers is either 31ST DWM, World Vision, Action Aid, Catholic

Relief Services (CRS), Adventist Development and Relief Agency, USAID, among

others because, it was the NGO that provided them with clean drinking water, the

clinic in the village centre, the afforestation project, credit facilities, school building,

extension services, market centre and many more.

2.5.6 Problems Associated with the Internally Generated Funds There are a number of problems associated with IGF which include:

The perception of people that facilities provided by the government should not

be paid for hinders the collection of internal funds. This problem surfaced

during a study carried out in the Suhum/Kraboa/Coaltar District Assembly

where the people were not willing to pay rent for using the assembly’s market

stores. (King, et al,2003).

At times there are delays in the transfer of monies from central government to

the district (government grants); this slows down the development process of

the district. At times projects are put on hold due to unavailability of funds

with an example being the construction of a market at Wramponso in the the

Asante Akim North District Assembly which was delayed for six months due

to the unavailability of funds (Government of Ghana, 2006).

District Assemblies in the country face the problem of inadequate personnel

and logistics like vehicles to help in the collection of taxes especially from

remote areas. This accounts for almost 20% loss of internally generated funds

(King, et al,2003).

2.6 The Institutionalisation of the District Assemblies Common Fund (DACF) Decentralisation can lead to severe imbalances in the regional distribution of wealth

and development, as the resources of local authorities are often unequal. This explains

why, and in view of the problems most of the District Assemblies face in generating

their own revenues to meet their financial commitments and to give effect to the

Decentralisation programme, there was the need for the setting up of the District

Assemblies’ Common Fund (DACF).

The District Assemblies’ Common Fund remains the dominant and reliable source of

funding for the implementation of district development programmes. Total releases of

funds from the DACF to all districts since its establishment in 1994, amounts to

¢4,363,180 billion in 2006 (Government of Ghana, 2007b)

The institution of the District Assemblies’ Common Fund (DACF) is enshrined in the

1992 Constitution of the Republic of Ghana under Article 252 which reads:

1. There shall be a fund to be known as the District Assemblies’ Common Fund

2. Subject to the provisions of this Constitution, Parliament shall annually make

provision for the allocation of not less than five percent (7.5%) of the total

revenues of Ghana to the District Assemblies for development; and the

amount shall be paid into the District Assemblies Common Fund in quarterly

instalments.

3. The monies accruing to the District Assemblies in the Common Fund shall be

distributed among all the District Assemblies on the basis of a formula

approved by Parliament.

4. There shall be appointed by the President with approval of Parliament, a

District Assemblies’ Common Fund Administrator.

5. Parliament shall by law prescribe the functions and tenure of the

Administrator in such a manner as will ensure the effective and equitable

administration of the District Assemblies Common Fund

6. Nothing in this chapter or any other law shall be taken to prohibit the State of

other bodies from making grants-in-aid to any District Assembly.

A number of other government agencies are also involved in the administration and

supervision of the use of the Fund. It is the Metropolitan, Municipal and District

Assemblies (MMDAs) that actually utilise the funds.

Section 7 of the District Assemblies Common Fund Act, 1993 (Act 455) stipulates the

following as functions for the Administrator:

Propose a formula for allocation of the Fund to the MMDAs to be approved by

Parliament;

Administer and distribute the Fund based on the approved formula;

Report on utilization of funds to the Ministry of Local Government, Rural

Development and Environment (MLGRD&E).

Certain percentages of the Common Fund are set aside for other activities and an

example of this is the reserve fund which is an amount equal to 10% of the share of

each assembly’s share of the Fund which is retained to provide resources for the

following expenses:

Five percent of this Fund is shared equally to the 200 Members of Parliament

(MPs)

for their constituency projects. This is the MPs share of the Common Fund. It

was initially paid into the DACF of the relevant constituencies but since 1999

it has been lodged in a separate account. The DA is, however, expected to

exercise oversight over the use of the funds allocated to each MP.

Two and half per cent is allocated to the ten RCCs to be used for their

statutory role of monitoring, coordinating and evaluation of the performance

of the Assemblies. While 50% of this allocation is shared equally to all the

RCCs, the other 50% is shared proportionally to the regions using the number

of districts in each region as a basis.

1.25% is allocated for activities on sanitation.

0.625% is allocated for maintenance of rural/feeder roads.

0.625% is allocated for rural health, housing and extension of

telecommunications to rural areas and for contingencies. This is meant to be

used as counterpart funding of projects co-financed with donors and to fund

emergencies.

2.6.1 Formula for Disbursement Section 7(a) of the District Assemblies’ Common Fund Act, (1993) Act 455 requires

the Administrator of the District Assemblies’ Common Fund to propose annually for

the approval of Parliament a Formula for Sharing the Common Fund to the District

Assemblies.

The formula for sharing the DACF, based on a number of factors with a focus on

equity and performance is deduced. The major factors that are used in the current

disbursement formula are represented below.

Table 2.3: Factors used in the current DACF disbursement formula

Factor Indicator Weight

Equality A percentage of the DACF is shared equally among all

districts

50%

Need Number of schools, pupil/teacher ratio, number of health

facilities, doctor/population ratio, nurse/population ratio

40%

Responsiveness Improvement in internal revenue collection of the district 5%

Service

pressure

Population density in the district 5%

Source: 2006 Annual Progress Report of the Implementation of GPRS II

Need Factor: This seeks to address the imbalance in development infrastructure

among the districts. The level of need is determined from the GDP per capita. This is

evident with the number of schools, doctor/population ratio.

The Equality Factor: This factor is aimed at ensuring that districts have a minimum

allocation from the Fund. This is to prevent the situation where certain districts will

be poorly served with the Fund whiles others are enjoying the lion’s share.

The Responsiveness Factor: This is a rewarding factor for assemblies that have done

well in revenue collection in terms of per capita revenue collected.

The Service Pressure Factor: This factor serves to compensate for population

pressure on facilities.

The current formula seeks to put all districts at par in terms of development (the

equality) factor where all districts are being given the same percentage. To respond to

the Growth and Poverty Reduction Strategy, the current formula has also been made

more pro-poor with attention being paid to health, education and water and sanitation

(the need factor).

With the consent of parliament, the 166 district assemblies are to get 7.5% of the total

revenues generated by the country every year for distribution on quarterly basis. This

is to help in widening the revenue base of the districts to help in carrying out

developmental projects (Adu, 2007)

2.6.2 Problems Faced by the Common Fund

The Common fund is being faced with a whole lot of problems including

frequent delays in the disbursement of the Fund to the District Assemblies.

There have been instances where payments into the Fund have been delayed

for more that one year, resulting in the failure to disburse monies to the

MMDAs in spite of the fact that the creation of the DACF and the payment of

the funds into the Fund is a constitutional requirement. Thus, complaints on

the part of the Assemblies centre on the delays n releasing their shares to them

or even, in some cases, the failure to release their full allocations to them. A

problem of this nature emanated when a study was conducted in Savelugu

Nanton District where the amount allotted was ¢1,507,991,223 but at the end

of the accounting year, the district had received only ¢1,231,430,415 (King, et.

al, 2003).

The supervision of projects has been questioned and also there seems to be no

coordination between contractors and beneficiary communities in the district.

The contract awards are not open to community people for effective

supervision. There came a time when the district had to use development fund

for recurrent expenditure, which is contravention of the laws guiding the use

of the DACF (Gyan-Baffour, 2003).

There have been complaints about discrimination in the disbursement of

DACF projects in some districts with some complaining that there is not even

one DACF project their community can boast of.

There have been complaints about the lack of transparency in the award of

contracts. Some assembly members of the Mpohor Wassa District Assembly

expressed lack of confidence in the District Tender Board, adding that the lack

of transparency leads to high contract cost. There was a case in the district

where a KVIP financed from the DACF estimated to cost ¢5.1 million ended

up at ¢10.2 million upon completion (King, et. al, 2003).

2.7 Decentralization and Development

The major concept behind the work is the decentralization concept where a successful

decentralized system will lead to each decentralized entity identifying and collecting

various forms of funds which include mainly the DACF and IGF. Where as the DACF

will be used to provide government projects which might include political projects,

the IGF will be used to initiate high priority projects of the communities to ensure

district-wide development. In one way or the other, both classes of projects will help

in enhancing the living conditions of the inhabitants thereby improving their standard

of living immensely.

Figure 2.1: Benefits of Financing Decentralised Development

Source: Author’s Construct

District wide development

Decentralization

DACF IGF/Domestic Sources

Improved Living Conditions and Standard of Living

Over concentration of development

2.8 Summary and Conclusion Ghanaian governments over the years have being putting in place mechanisms to help

in development at the grassroots (local level) with the belief that local level

development can be viewed as a stepping stone to national development. The central

government has tried to help in financing developmental projects at the local level to

ensure this nationwide development.

Efforts have also been made to empower the 166 district assemblies in the country to

identify their own revenue bases to support central government in performing their

respective duties to improve the living conditions of the people.

It was realised from the write up that on the whole (National level) the IGF plays

second to the District Assemblies Common Fund which has proved to be the largest

contributor of funds for the district assemblies contributing almost 50% of District

Assemblies’ revenue in 2006; this is depicted in figure 2.2.

Fig 2.2 Sources of Revenue of District Assemblies – 2006

Source: Government of Ghana, The Implementation of the GPRS II; Annual Progress

Report

From the literature, it is evident that the major source of fund for carrying out

development projects in the District Assemblies is the District Assemblies’ Common

Fund. These projects are primarily meant to better the lives of the beneficiaries thus;

the next chapter looks at the impact the District Assemblies’ Common Fund have on

the economic development of the Kwahu-South District.

IGF14%

HIPC Funds17%

DACF49%

GoG Grants9%

Donor Grants11%

CHAPTER THREE THE BENEFITS AND PROBLEMS OF DACF IN KWAHU-SOUTH

3.1 Introduction The previous chapter highlighted on the concept of decentralization and the

conditions of sustaining the decentralization process. In establishing this concept,

financing served as a major factor in ensuring sustainable decentralization and

promoting local economic development. This chapter thus seeks to narrow the context

to the Kwahu-South District Assembly and how the District Assemblies’ Common

Fund (DACF) as a source of financing has impacted on the economic development of

the area.

3.2 Profile of the Kwahu-South District In the year 2004, the L.I establishing the Kwahu-South District was replaced by L.I

1742. Under the L.I 1742, the Kwahu West district Assembly has been carved out of

the Kwahu South District. As one of the 17 District Assemblies in the Eastern Region,

it has Mpraeso as its capital.

3.2.1 Location and Size The district is located in the north-eastern part of the Eastern Region. It shares

common boundaries with Sekyere East District to the north, Asante-Akim North and

Asante-Akim South Districts to the west, Afram Plains District to the East and Birim

North, East Akim and Fankeakwa Districts to the south. Specifically, it lies between

latitude 60 30’N and 70 N and longitude 00 30’ W and 10 W. It covers a total land area

of 1462km2

Figure 3.1: Kwahu-South District in National and Regional Context

3.2.2 Relief, Climate, Vegetation and Soils The district lies within three physiographic regions namely the southern voltaian

plateau consisting of a series of escarpments, notable among which is the Kwahu

scarp rising from 220m to 640m above sea level. The second physiographic region is

the Forest Dissected Plateau and the third is the plains which stretches into the

southern voltaian plateau and rises from 60m to 150m above sea level.

The Kwahu-South District lies within the west Semi-Equitorial region. It experiences

the double maxima rainfall pattern named the major and minor rainy seasons. The

major rainy season starts from April and ends in July. On the other hand, the minor

rainy season starts from September, ending in October. Annual rainfall is between

1580mm and 1780mm. Rainfall intensity however, decreases towards the voltaian

basin.

In terms of vegetation the district lies within the Semi-Deciduous forest zone. The

vegetation is dense in terms of tree coverage with most trees shedding off their leaves

in the dry season. Trees of economic value like Odum, Wawa, Sapele and a host of

others are found in the forest. The forest is made of three layers namely the upper,

middle and lower layers. A greater part of the natural vegetation has been altered to

man’s activities on the land.

Soils belong to the forest ochrosols and consist of fine sand loams, congregational

loams, non-gravel sandy clay loams and iron pan soils. These soils possess good

chemical properties of clay and appreciate amount of humus, making them generally

fertile for the production of both cash and food crops such as cocoa, coffee, plantain,

cassava, yams. These factors contribute immensely to the agricultural production of

the district and also a source of revenue accruing to the district

3.2.5 Demographic Characteristics The population of the Kwahu South District grew from 113,078 in 1974 to 198,196 in

1984 at growth rate of 4% per annum. The 2000 population census puts the

population of the district at 217,485. With the creation of the Kwahu-West District,

the projected population of the Kwahu South District using a growth rate of 4% is

165,036. This represents 10.3% of the regional proportion. Out of this figure 51.5%

are females whilst 48.5% constitute males. Urban population constitutes 38.2 as

against 61.8% rural population.

The age structure of the district follows much the same pattern as that of the regional

level. To a large extent the population is youthful with children under 5 years

constituting 14.2%. The table below compares the district figures with the national.

Table 3.2: Age Structure by District/National (%)

Age-Group District (%) National (%)

0 – 4 14.2 14.5

5 – 19 36.8 36.4

20 – 49 31.4 36.9

50 – 69 13.3 8.3

70+ 4.3 3.9

Source: Kwahu-South District Assembly MTDP (2006-2009)

It could be observed from the table above that there is minimal difference between the

district and national figures. The age cohort 20 – 49 is lower compared to the national

average. This may be due to the out-migration in the district which the district is very

well noted for due to the high interest in business and trading activities in Accra and

parts of the country. The comparatively higher population ratios of the district over

the national of people above 50 years may also be due to senior citizens who have

retired home.

The sex ratio of 93.2 males to 100 females is lower than the regional ratio of 97.0. In

the rural areas, the medial age is 18.9 years as compared with 17.6 years in the urban

centres. By implication, the urban population is more youthful than the rural probably

due to rural-urban migration of the youth within the district.

From the age cohort, the bulk of the district’s population can be found in the school

going ages cohort and the working labour force thus there is the need to provide

educational facilities and employment opportunities to satisfy the needs of the

populace. The DACF will thus play an important role since it is the largest revenue

base of the district.

3.3 Traditional Sources of Revenue The District Assemblies’ Common Fund is the largest contributor of financing

projects in the Kwahu-South District contributing almost 50% of the district’s revenue

sources. Before the institution of the DACF, the Kwahu-South District relied on the

following revenue sources in carrying out development activities in the district:

Internally Generated Fund (IGF),

Government transfers

Support from DANIDA

Support from EU

Community Based Rural Development Projects (CBRDP)

Though the DACF has established itself as the main source of revenue to the district,

these sources are still relied upon to supplement the DACF. To determine whether

the district benefited from government resources before the institutionalisation of the

DACF, 34 assembly members were interviewed and 25 out the 34 responded in the

affirmative that their electoral areas benefited from national resources before the

DACF. The remaining 9 representing 21.5% were of the view that their respective

electoral areas were left out in the sharing of national resources before the institution

of the DACF.

Institutional analysis of the field survey gave the current trend of revenue in the

district as the IGF contributing 20% of the district’s revenue base and the others being

DANIDA- 10%, EU- 10%, CBRDP (10%), Government transfers (including DACF)-

50%. The major problem associated with these sources is the delay in the release of

funds which affect the commencement of development projects thus drawing back the

development process in the district. There is also a problem with conditionalities

attached to the sources in terms of community contributions which results in other

interests being sought other than the interest behind the said projects with EU funding

which at certain times give specific sectors monies should be invested.

From the statistics above, the IGF serves as the second largest contributor the

district’s revenue base and therefore contribute immensely in the development of the

district. Primary data collected categorised the IGF under the following headings:

i. RATES AND RECEIPTS:

a. Property rates

b. Sanitation rates.

ii. LAND:

a. Revenue from stool lands

b. Sale of building permits

iii. FEES AND FINES

a. Court fines

b. Slaughter house fees

c. Marriage and divorces

d. Burial and funeral

iv. LICENSES

a. Sign writers

b. Hotel operators

c. Restaurants and chop bars

d. Liquor sellers

e. Entertainment duties

f. Stores, kiosks etc

v. RENT

a. Rent of Assembly’s property

b. Buildings and grounds

vi. INCOME

a. Proceeds from assembly’s tractor

b. Proceeds from assembly’s tanker (especially the sewage tanker)

The next table gives a picture of the absolute values of the IGF accrued to the district

over a nine year period through these avenues.

Table 3.3: Internally Generated Fund

Year Inflow (GH¢)

1999 42,570.39

2000 42,456.84

2001 44,143.82

2002 84,139.99

2003 96,303.17

2004 106,974.73

2005 91,477.61

2006 129,435.48

2007 158,877.06

Source: Field Survey 2008.

To help get a better pictorial view of the information above, a line graph is presented

to show the trend of the internally generated fund accruing to the district over the nine

year period.

Figure 3.2 Internally Generated Fund Inflows

Source: Field Survey, 2008

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

year 1999 year2000

year 2001 year2002

year 2003

year 2004

year 2005

year 2006

year 2007

It can be deduced from the table and the line graph that only two out of the nine years

recorded a decrease in revenue where as other years increased by almost 50% of the

previous year. From the line graph it is clear that after 2001, income increased in an

increasing rate until it dropped in 2005 but also saw an upward movement the next

year through to 2007. This increase is attributed to a number of reasons including:

Discovery of new sources of revenue like burial and funeral fees which is

serving as a source of revenue.

Improvement in monitoring system since the assembly dispatched officers to

check the activities of tax collectors to ensure that monies collected are all

accounted for.

Tax education campaign on the need to pay taxes regularly; through the

Information Service Department, the assembly has embarked on educating the

populace using assembly’s facilities on the need to pay taxes.

Involvement of citizens in the preparation of fee fixing resolution; through the

assembly members, the citizens contribute to fee fixing on taxes like market

tolls.

3.4 The District Assemblies’ Common Fund (DACF)

3.4.1 District’s Share

The KSDA has benefited from the DACF since 1994 but data is only available from

1999 to 2007. Table 3.4 shows the share of the KSDA for the period 1997-2007.

Table 3.4: District’s Share of DACF

Year Amount Received (¢)

1999 73,616.57

2000 93,800.49

2001 122,651.08

2002 161,255.73

2003 381,695.41

2004 466,389.38

2005 430,991.19

2006 425,176.44

2007 358,262.23

Source: Field Survey, 2008

Analysing based on the table 3.4, the district’s share of the DACF increased yearly

from 1999 before reaching a highest inflow of ¢4,663,893,802.00 in 2004. However

the inflows started reducing from 2005 to date (2007) with reasons given as deduction

from source; this is to say government donates equipments and materials like vehicles

and satellite dishes and deduct from the district’s share of the District Assemblies’

Common Fund (DACF) from source. An institutional survey conducted in 2008 came

out with an example as the Toyota Pick up donated by government to the KSDA in

2005 valued at ¢250,000,000 which was deducted from the district’s share of the

DACF at source without the knowledge of the district only to be informed later on.

Due to this and other situations, the DACF to the entire district has been rendered

inadequate to provide the needs of the people due to the vast area that the district

covers.

3.4.2 Pattern of Releases To empower the KSDA to be in the position to carry out its development roles

throughout the year, the share of the DACF is released quarterly to ensure enough

revenue in the district’s coffers at all times. However over the years the motive behind

the quarterly releases is not being achieved due to the number of releases left in

arrears. For example the district is yet to receive the amount for the last quarter of

2007 with the first quarter of 2008 also in mind.

This tends to slow down the development process in the district since estimated time

for the completion of projects are not met due to unavailability of funds.

Notwithstanding this, the DACF has helped in improving the standard of living of the

people in the district The district has benefited from a number of development

projects in areas of education, health, agriculture which all have a long term effect of

improving the lives of the people.

3.4.3 Adequacy and Equitability in Sharing To help in knowing whether there is equitability in the sharing of the DACF to the

various communities in the district, 34 assembly members were interviewed to get

their view on the sharing among communities. The study had a sample size of 38 but

only 34 being the elected assembly members knew what actually knew the activities

of the assembly. Table 3.5 shows the responses of the assembly members concerning

the adequacy and equitability in the sharing of the DACF among communities.

Table 3.5: Views of Assembly Members on the Adequacy and Equitability in the

Sharing of the DACF

Yes (%) No (%) Total

Adequacy 7 20.6 27 79.4 34

Equitability 9 26.5 25 74.5 34

In explaining the parameters, adequacy refers to whether the amount invested in each

community is enough to help in the development of the respective community. On the

other hand, equitability refers to the amount received by each community in

comparison with that of other communities in the district.

To give a clearer picture of the information above, the views of assembly members on

adequacy and equitability in the sharing of the DACF among communities is

presented in a bar graph in figure 3.3.

Figure 3.3: Views of Assembly Members on the Adequacy and Equitability in the

Sharing of the DACF

0

5

10

15

20

25

30

Yes No

Answers

No.

of A

ssem

bly

mem

bers

Adequacy

Equitability

From the survey, 7 (20.6%) out of the total 34 assembly members interviewed were of

the view that the amount of the District Assemblies’ Common Fund invested in their

respective communities was adequate to help in carrying out their development

projects. The remaining 27 (79.4%) were also of the view that the amount of the

DACF invested in their respective communities was not adequate to help in their

development process thus answers why communities like Ntomem, Nketepa, Pepease

and others lag behind in the development of the district based on the number of

facilities which these communities are comparatively disadvantaged in terms with the

other communities like Mpraeso, Atibie and Abetifi.

Concerning equitability in the sharing of the DACF among communities, 9 (26.5) out

of the 34 assembly members interviewed argued that there wasn’t any equitability in

the investment of DACF in the various sectors. They however understood that some

communities like Mpraeso, Obo and Abetifi needed more development projects due to

their importance in the district but other communities are not even given what they

deserve. Their concern is that too much emphasis is being made on the bigger

communities to the detriment of other smaller communities. The remaining 25

assembly members were also of the view that since the sharing is done based on the

approved criteria; then each community is therefore given what it is due. They

believed development is well spread over the entire district and that each

town/community is given its fair share of the DACF based on the role each

community plays in the district.

3.4.4 Comparison of IGF and DACF Internally Generated Fund in the Kwahu-South District Assembly is seen as a

supplement to the DACF in performing development roles in the district. This section

seeks to establish the differences between the IGF and DACF and establish the trend

between both. Table 3.6 gives the absolute revenue accruals and the percentage

increases or decreases for the respective years.

Table 3.6: Revenue Changes between IGF and DACF

Year DACF (¢) % +/- IGF (¢) % +/-

1999 73,616.57 - 42,570.39 -

2000 93,800.49 21.5 42,456.84 (0.3)

2001 122,651.08 23.5 44,143.82 3.8

2002 161,255.73 23.9 84,139.99 47.6

2003 381,695.41 57.8 96,303.17 12.6

2004 466,389.38 18.2 106,974.73 0.09

2005 430,991.19 (8.2) 91,477.61 (16.9)

2006 425,176.44 (1.4) 129,435.48 29.3

2007 358,262.23 (18.7) 158,877.06 18.5

Source: Field Survey, 2008

%+/- refers to percentage increase or decrease

From the table, the IGF keeps fluctuating over the years recording an increase in one

year and decreasing the following year. For instance it recorded a decrease of 0.3% in

2000, increased in 2001 up to 2004 and reducing again in 2005. This inconsistency is

attributed to the fact that certain tax fields are not covered due unavailability of data

on operators of smaller business units and thus they are able to evade these taxes.

The same can be said of the DACF but there seems to be some consistency as

compared to the IGF. The DACF recorded an increase from 1999 to 2004 before

reducing by 8.2%, 1.4% and 18.7% in 2005, 2006 and 2007 respectively. This is

attributed to the fact that, certain amounts are deducted from source before the money

reaches the district. The trend of the increases and decreases in these revenue bases is

shown in figure 3.4.

Figure 3.4: Trend of Inflows between IGF and DACF

The above comparison tries to establish whether the IGF is able to stand in for the

DACF in case of any fluctuations but taking into account the rate at which the IGF

keeps fluctuating and the percentage at which it decreases, it cannot be said that the

IGF is a direct replacement for the DACF.

3.5 Project Selection and Approval Process From the institutional survey, projects to be implemented with the DACF are selected

from the Medium Term Development Plan (MTDP) by the project selection

Committee. The project selection Committee consists of the following:

Budget committee consisting of the District Coordinating Director, District

Budget Officer, District Planning Officer, Local Government Inspector and

District Revenue Superintendent.

Finance and Administrative Committee consisting of District Budget Officer,

District Planning Officer, Assembly members,

Executive Committee consisting of the District Chief Executive and

chairpersons of sub-committees.

The selected projects are laid before the district development planning sub-committee

of the assembly for further deliberations. It also does this taking into consideration the

principles, priorities and goals formulated in the Medium Term Development Plan.

After the Planning Sub-Committee has discussed this, the selected projects are sent

050000

100000

150000

200000

250000

300000

350000

400000450000

500000

IGF

DACF

with the notes accompanying them; it is then referred to the Executive Committee and

the projects selected are extensively deliberated upon.

The Executive Committee then refers the projects which had been deliberated

thoroughly and found to be prudent to the District Assembly for approval at a General

Assembly meeting. The approval of the project is done through debates and voting at

the General Assembly meeting.

The next step is to send the selected and approved projects to the Regional Co-

ordinating Council for scrutiny by the Regional Projects Monitoring Team taking into

consideration the District and Regional Development Plans. The projects are finally

submitted to the Administrator of District Assemblies’ Common Fund for coding.

3.5.1 Project Costing Before projects are awarded on contracts, the assembly conducts market surveys to

arrive at cost estimates to help as a guideline in the awarding of contracts to cost

efficient bidders. Project costing problems arise when the project design is not known.

3.5.2 Contract Awarding Process Projects approved by the Regional Projects Monitoring Team are awarded on

contract by the District Tender Committee/Board which consists of the District Chief

Executive, Presiding Member, Members of Parliament, District Planning Officer,

District Finance Officer, Feeder Roads Engineer, Lawyer, Director of Education,

Director of Health, Public Works Department Engineer, District Budget Officer,

District Coordinating Director and the District Director of Agriculture.

Tenders are opened for competitive bidding by interested contractors after which the

Tender Committee evaluates the bids submitted by the contractors. This evaluation

involves the consultant/project engineer providing expert advice to the district

depending upon the suitability of the cost and other terms provided by the contractor

in his tender documents. The evaluation report is then submitted for approval after

which the contract is awarded to the contractor who satisfied the committee in his/her

tender documents.

3.5.3 Projects Initiated with DACF in the District Since the inception of the DACF, the district has been able to carry out various

development projects to improve the standard of living of the people and also to

ensure their total well being. To help improve the level of education in the district,

various educational projects have been undertaken including;

Supplying various schools in the district with hundred (100) dual desks

amounting to a total of two million cedis (¢200 000 000) in 1994. The

Assembly in addition supplied a batch of four hundred desks to schools in the

district at a cost of eight million cedis during the same year under review.

Some of the beneficiary schools are Nkwatia D/A Primary, Pepease Presby

Primary, Suminakese D/A Primary and JSS.

The Assembly undertook rehabilitation works on bungalow number 2 at

Mpraeso Secondary School at a cost of ¢9 646 000 in 1995. This was aimed

at solving the staff accommodation problem in the school then.

In 1995, the District Assembly financed the construction of a classroom block

at the St. Paul’s Secondary School – Asakraka trough the DACF at a cost of

two million, three hundred thousand cedis (¢2 300 000).

The St. Peter’s Secondary School also had its share of development when the

school’s Science Resource Centre was rehabilitated to the tune of five million,

two hundred thousand cedis (¢5 200 000) financed entirely with the DACF.

This ensured effective teaching and learning for the students and other schools

who used the Science laboratory for science practicals.

In 1998, the District Assembly invested a total of ten million cedis (¢10 000

000) on the cladding of a number of pavilions in most of the schools

throughout the district to ensure the beautification of the various campuses.

Rehabilitation of Dwerebease D/A JSS at a cost of ¢30 000 000 in 2006 and

also rehabilitating the Nkwatia Nana Ampadu Primary at a cost of ¢35 000

000 in 2004 (KSDA, 2006)

The health sector has also seen an improvement in infrastructure since the institution

of the DACF including the construction of a health and management team centre at

Atibie Hospital at a cost of one hundred and forty five million, one hundred thousand

cedis (¢145 100 000). In 1994, rehabilitation works were carried on the Abetifi Clinic

at a cost of thirty million cedis (¢30 000 000) to ensure easy access to health facilities

in the town. In 1998, the Pepease Health Post also saw an uplift through rehabilitation

to a tune of nineteen million, four hundred and thirty-four thousand cedis (¢19 430

000).

Accessibility also plays a major role in the development of an entity thus making

transportation an important player in the development process. The Kwahu South

District Assembly with finance from the DACF has carried out various road projects

with examples being the rehabilitation work on the Mpraeso – Amanfrom on the

Accra – Nkawkaw road to Asuboni number 3 also in the Kwahu-South District at a

cost t of fifty-nine million cedis (¢59 000 000). In 1998, the assembly undertook a

number of town-roads rehabilitation district wide at a cost of ten million cedis (¢10

000 000).

The assembly also constructed the road leading to Islamic School at Atibie at a cost of

¢64 000 000 in 2005. During the period 2001-2006 the assembly undertook minor

rehabilitation work at a total cost of ¢88 000 000 from the district’s share of the

DACF.

In 1998, the assembly rehabilitated the road linking Abene and Hweehwee, the major

tomato growing community in the district to aid the transportation of foodstuffs to the

market centres. The assembly also constructed the road from Muramuna junction to

Atuobikrom one hundred and seven million, nine hundred and fifty-two thousand

cedis (¢107 950 000).

The assembly has also embarked on a number of rehabilitation and construction of a

number of old and new markets respectively in the KSDA in order to alleviate most of

the acute problems market women face in carrying out their trading activities. In view

of this, the Obo market was constructed at a cost of seventy four million, five hundred

thousand cedis (¢74 500 000) in 2001. The Mpraeso market has also rehabilitated at a

cost of ¢224 000 000.

The DACF has also been used for the rural electrification project which forms a top

priority of the district’s development plan as more rural areas like Hweehwee,

Sempoa and a host of others have been connected to national electricity grid. This has

healed in open up jobs for the youth and unemployed in the fields of welding,

vulcanizing and a host of others. Government functionaries and other service workers

who are posted to these towns now accept their respective postings due to the

availability of electricity there increasing productivity.

The DACF has also financed projects under the water and sanitation sector including

the construction of bore holes to serve as source of portable water for the inhabitants

of the district. In addition, various toilet facilities have been constructed district wide,

sanitation bin also provided at vantage points to keep the communities clean thus

reducing the spread of diseases.

In addition to the aforementioned completed projects, the district is also undertaking

various development projects throughout the district with funding from the DACF.

Table 3.7 shows the on-going projects, cost involved and their locations.

Table 3.7: DACF On-going Projects in the District

Project Location Start

time

Finish

time

Cost (GH¢)

FM Station building Abetifi 2006 2008 49,554.69

10 seater latrine Abetifi 2007 2008 12,004.14

2nd Semi-detached bungalow Mpraeso 2006 2009 38,534.96

Drains Obo 2006 2008 10,914.54

Lorry park stores Mpraeso 2004 2009 323,861.93

Islamic School Road Atibie 2007 2008 15,600.00

Paving of Mpraeso lorry park Mpraeso 2008 2009 57,049.00

Mpraeso lorry park Mpraeso 2007 2009 21,700.00

Staff quarters Atibie 2004 2008 18,167.05

Bepong Methodist JSS Bepong 2007 2009 31,400.00

Market stores/stalls Nkwatia 2008 2010 31,400.00

Butchers’ house Mpraeso 2008 2008 2,800.00

Guest house Adawso 2008 2010 40,000.00

WC toilet Asakraka 2006 2009 20,000.00

Rehabilitation of Onyemso

market

Onyemso 2008 2009 10,000.00

Mango plantation project Abene 2007 10,000.00

Construction of CHPS Centre Osubeng/Mframa 2007 2010 13,000.00

Source: Supplementary Estimates for 2006 and 2007 Common Fund

In interviewing assembly members on the role each community played in the

implementation of projects, the communities play a role in ensuring the successful

implementation of the projects. The communities contribute both in cash to

supplement the funding and also in kind in the form of land, labour etc. This at times

reduces the cost incurred by the assembly in performing its duties.

The communities also supplement the work of the assembly by carrying out their own

development projects. Community initiated projects in the Kwahu-South District

Assembly include:

Teacher’s quarters at Abene

KVIP and a police station at Bepong

Water project at Mpraeso

Market complex at Atibie

KVIP, Ultra modern library complex, construction of court building and the

construction of an 8-unit classroom block at Abetifi.

Water project, electrification project, community centre and a community

clinic at Bukuruwa

Toilet facility and a 6-unit classroom block at Kwahu-tafo.

hand pump, durbar grounds and a KVIP at Besease

Cassava processing factory at Ntomem

A KVIP at Sumenakese

Food store at Kwahu Praso

KVIP at Nkwatia

electrification project at Asakraka

3.5.4 Management of Completed Projects When projects are completed, they handed over to the communities for usage but a

committee is formed tasked with making sure the projects are in good shape always.

The committee is mainly made up of inhabitants of the community with the assembly

members of the locality as the chairman. Minor problems are taken care of by the

committee to ensure to ensure that the projects last long to serve the purpose of its

existence.

3.6 Impact of Projects 23 respondents representing 100% responded the various projects put up have

impacted positively. Surveys and community fora organized by the assembly also

revealed that the communities have really benefited from these projects.

3.7 Challenges Facing the DACF in the Kwahu-South District The DACF plays a major role in the development of the Kwahu-South District

Assembly but faces a number of problems which include inadequacy. This is due to

the fact that about 41% of the district’s share of the fund is deducted at source. This

affects implementation of the district’s plan and hence the budget.

The statutory allocations often take the bulk of the district’s share of the DACF which

adversely affects the activities of the assembly regarding the district’s priorities. The

District Budget Officer expressed this when interviewed during the survey and that

the allocations tend to affect the budget of the district since the DACF plays a major

role in district’s financial budget.

Untimely releases of the monies also tend to affect the development process of the

district since the commencement of some projects needs to be postponed due to lack

of funds. Another problem facing the DACF happens to be conflict of interest

between the District Chief Executive and the primary stakeholders. Certain political

projects are included in plans as against the community’s priorities.

To improve upon the issues mentioned, recommendations are made in the next

chapter which if taken into consideration will help in the development of district

assemblies.

CHAPTER FOUR SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION

4.1 Introduction

The previous chapter was aimed at collecting and analysing data about the District

Assemblies’ Common Fund (DACF) in a more confined geographical area (Kwahu-

South District Assembly). This was to make analysis more specific and easier. After

collecting and analysing data, certain findings were arrived at and this chapter seeks

to analyse the implications of these findings and if possible make recommendations to

help improve or correct various problems associated with the DACF. The chapter

thus talks about the findings and its implications, recommendations as well as

conclusion to the whole work.

4.2 Summary of Findings

The findings are categorised under different sub-headings to know the exact

implication of these findings.

4.2.1 Traditional Sources

With the traditional sources of revenue to the district, the Internally Generated

Fund contributes about 20% therefore establishing itself as the largest revenue

base of the district.

The IGF inflows have seen an upward increase over the years due to factors

including the identification of new tax fields.

Some tax fields are not tapped due to the lack of knowledge of their existence

or lack of logistics to collect such revenues.

DANIDA, EU and the CBRDP together forms 30% of the revenue base for

financing of development projects in the district.

4.2.2 Pattern of Releases

The approved pattern of releases of the DACF is on quarterly basis but that is

not the case as the previous year’s last quarter are at times delayed till the

second quarter of the next year.

The releases most at times do not add up to the required amount at the end of

the year.

Three quarters are received in one accounting year

4.2.3 Project Selection and Approval Process

Projects are selected from the Medium Term Development Plans (MTDP)

Selection is done by a committee with the members being the major

stakeholders in the district.

Projects are approved by the general assembly through debates and voting.

4.2.4 Costing and Contract Awarding Process

Project costing is done through market survey

Contracts are awarded by a tender committee

Tenders are opened before contract is awarded.

4.2.5 Impacts of Projects

Effects of projects on beneficiaries is done through survey and community

forums

4.3 Implication of Findings

The implications of these findings have to be established to know whether they have a

positive or a negative effect. If there is a positive effect then measures will have to be

put in place to sustain it thus a negative effect will require measures to rectify these

problems.

4.3.1 Traditional Sources

With the EU, CBRDP, DANIDA and IGF representing 50% of the revenue base of

the district in financing development in the district, they serve as a major force which

supplement the DACF in the development of the Kwahu-South District Assembly.

With the identification of new tax fields such as burial and funeral fees, it is

anticipated that extra revenue will be accrued to supplement the other forms of

finance in carrying out development projects in the district. This results in the upward

increase of the financial inflows from the internally generated fund of the district thus

efforts have to made to ensure the sustainability of this and if possible increase to

boost the revenue base of the district.

Though IGF collection has seen an increase over the years, the untapped tax fields

will add more money to the IGF if measures are put in place to tap these fields. More

personnel need to be employed to collect these taxes since the major problem

attributing to this is the inadequacy of personnel to carry out the tax collection.

4.3.2 Pattern of Releases

The quarterly releases was to make sure the district assemblies had money in their

coffers always but the situation in the Kwahu-South District is very different where

monies are not released according to approved time. The third and final quarter’s

releases of some years are not received until the second quarter of the next year; this

affects the development of the district. Certain projects have to be pushed forward due

to the unavailability of funds; this adversely affects the activities of the assembly

since money will be needed for development activities. Efforts should be made by

government to release each district assembly’s share of the DACF on time as

approved to ensure the carrying out of development projects.

4.3.3 Project Selection and Approval Process

The communities’ needs, aspirations and priorities are the main focus of the Medium

Term Development Plan of the Kwahu-South District Assembly thus; with the

selection of projects from MTDP, conflict of interest is reduced to ensure proper

maintenance of the project by the community after completion.

In order to prevent any conflict of interest, the project selection process is done by a

committee with representatives from various actors in the process. The voting and

debating channels used in the selection process ensure that the view of every

stakeholder is heard and taken into consideration. When expected beneficiaries are

thus involved in the selection process, maintenance is therefore guaranteed since the

projects will be the priorities of the beneficiaries.

4.3.4 Costing and Contract Awarding Process

Since contracts are awarded after tenders are opened for interested bidders to submit

bid for evaluation the best bidder is selected for the contract. The Tender Committee

will have a number of alternatives to choose the best from and this ensures quality

work done since each bidder will be willing to do his/her best to attract attention.

Cost effectiveness will also be ensured since there would be a number of bidders to

choose from hence the bidder with the reasonable cost and quality workmanship will

be chosen to ensure the effective and efficient use scarce resources.

4.3.5 Impact of Projects

With the primary stakeholders being the main focus of the survey and community

forums to determine the impact of projects on beneficiaries, the best impact

assessment can be established. This helps determine the direct effects of projects on

beneficiaries.

4.4 Recommendations

During the data collection, certain problems were identified which need to be

rectified. This section tends to make recommendations and suggestions to help solve

these problems to ensure the effective and effective use of the DACF.

Firstly government should allow the District Assembly to have total control on the use

of the DACF. This will make sure that the priorities of the assembly are taken into

consideration since the assembly has first hand information on what the assembly

needs. Making sure the assembly takes control of the DACF makes the assembly the

sole administrator of the fund and determines the field to invest such monies to ensure

the development of the district.

The central government should also try as much as possible to release the district’s

share of the DACF on time to help in the performance of development roles. When

funds are released on timely basis, the district will able to carry out its development

activities within the time frame allotted for such projects which also have a long term

effect of increasing the standard of living of the people.

There is also the need for the assembly to employ additional tax collectors to collect

taxes from the untapped tax bases. This will increase the financial accruals in terms of

internally generated funds of the district; thereby putting the district in a better

position to perform its development duties.

With the vast area covered by the district, it’s share of the DACF is inadequate to

carry out the various activities outlined in the MTDP therefore efforts should be put in

place to bring into being the proposed 7.5% of national income. This is expected to

increase the revenue base of the assembly and put it a better position to carry out its

development activities etc.

Government should also desist from allowing District Chief Executive (DCE) to

influence the selection process by including certain political projects. This problem

was realised during the survey carried out in the Kwahu-South District Assembly.

Though the selection process is fair and transparent, the DCE has some form of veto

power which he uses to select projects which are not in the MTDP thus wouldn’t have

any significant positive impact on the expected beneficiaries.

Central government should also make it a point to desist from partial decentralization

in terms of governance, finance to mention but a few. The district assemblies should

be allowed to govern their areas of jurisdiction, determine where to invest their

resources and to what use to put such resources.

The assembly can dispatch monitoring teams to project sites to ensure that the right

thing is done since there have been cases where contractors use inferior quality

materials to carry out projects which adversely affects the life span of the projects.

Strengthening monitoring with keep contractors on their toes to do the right thing.

It is therefore believed that if the aforementioned recommendations are taken into

account, the administration and main objective behind the establishment of the DACF

will be achieved.

4.5 Conclusion

The District Assemblies’ Common Fund has played an important role in the entire

development of the Kwahu-South District to enhance the standard of living of the

people. The study revealed that the IGF plays an important role in the development

process by playing a supplementary role to the DACF, other sources other than the

IGF which funds development projects include; CBRP, EU, and DANIDA.

Directly, much have not been done in the economic sector of the district to improve

the economic development but the sectors invested in have an indirect effect on the

economic development. The utilization of the DACF has been invested immensely in

the health sector, education, agric and road construction. With the investment in the

health sector, the health safety of the inhabitants is help at a high level to ensure that

the working population is always fit to perform their various roles to ensure the

development of the district.

Investing the DACF in the education sector seeks to produce a literate population to

help in carrying out development activities to improve the economy of the district.

Agric is also a major sector where resources have been invested in the district to

increase productivity for internal consumption and exportation to other Metropolitan,

Municipal and District Assemblies.

Most of the agricultural production areas like Sumenakese, Ntomen, Hweehwee are

not close to the market centres therefore there is the need to these market centres

accessible to the farmers. In order to ensure this, the district has embarked on a

number of road constructions linking the production sector to the market centres with

finance from the DACF. A typical example is the construction of the road from

Hweehwee to Abetifi to aid the transportation of foodstuffs from Hweehwee to the

surrounding communities.

The institutionalisation of the DACF has had really benefited the KSDA

notwithstanding the few problems it faces. Continuity should be ensured if Ghana is

to meet its desire to reach a middle income status by 2015 since nationwide

development also play a major in the economic uplift of any country.

BIBLIOGRAPHY Acheampong, K (2006) The Local Government System in Ghana,

(http://www.clgf.org.uk/index_profiles.htm)

Adu, K (2007), District Assemblies’ Common Fund to Access 7.5% Funds in 4th

Quarter, The Statesman, Oct 13, Page 1.

Asante, F.A. (2003), Economic Analysis of Decentralisation in Rural Ghana.

Germany: Peter Lang.

Asante, F. A and Ayee, R. A. J (2000) Decentralisation and Poverty

Reduction, Legon, University of Ghana; Institute of Statistical, Social and

Economic Research (ISSER).

Ayee, J.R.A. (1995) "Financing Sub-national Governments in Ghana: the Case of the

District Assemblies' Common Fund", Regional and Federal Studies, Vol. 5,

No. 3: (Autumn): 292-306.

Ayee, J.R.A. (2000), Decentralisation and Good Governance in Ghana. Unpublished

paper of May 2000 prepared for the Canadian High Commission, Accra,

Ghana.

Bratton, M., P. Lewis & E. Gyimah-Boadi (2001), ‘Constituencies for Reform in

Ghana’. The Journal of Modern African Studies. vol.39 no.2, pp.231-59

Barnnet, Camille C., Minis, P. Henry Jerry VanSant (1997), Democratic

Decentralisation, United States Agency for Development Working Paper, New

York.

Crawford, G (2004), Democratic Decentralisation in Ghana: Issues and Prospects;

POLIS Working Paper No. 9, University of Leeds.

Government of Ghana (2007a), Press Briefing on use of HIPC Funds, Accra.

Government of Ghana, (1992), The 1992 Constitution of the Republic of Ghana.

Tema, Ghana Publishing Corporation.

Government of Ghana (2007b), The Implementation of the Growth and Poverty

Reduction Strategy II 2006-2009; 2006 Progress Report. (Approved by the

National Development Planning Commission on 31st March, 2007) Accra.

Griffin, K. (1981) “Economic Development in a Changing World”, World

Development, Vol. 9, No. 3: 221-226

Gyan-Baffour, G (2003), Decentralisation as a means to Improve Governance and

Poverty Reduction. Experience from Ghana, Working Paper.

King, Azeem, et. al. (2003), A Report on Tracking of the District Assemblies’

Common Fund, A Pilot Study of Four District Assemblies. Unpublished

Report

Module A, (2003), Decentralization Policies and Practices; Case Study Ghana,

Unpublished

Nkrumah, S.A. (2000), ‘Decentralisation for Good Governance and Development:

The Ghanaian Experience’ Regional Development Dialogue vol.21 no.1,

pp.53-67

Nzouankeu, J. M. (1994) “Decentralisation and Democracy in Africa”, International

Review of Administrative Sciences, Vol. 60: 213-227.

Ofosu-Appiah, B (2003), Making NGO’s More Effetive and Responsive in a

Globalized World. (http://www.ghanaweb.com)

Osei, R and P. Quartey, ( 2001), The HIPC Initiative and Poverty Reduction in

Ghana: An Assessment Paper for the WIDER Conference on Debt Relief.

Helsinki.

Prud'homme, R. (1995) "The Dangers of Decentralisation". The World Bank

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SAMPLE QUESTIONNAIRE

DISTRICT COORDINATING DIRECTOR AND BUDGET OFFICER’S

QUESTIONNAIRE

1. Name:

2. Rank:

3. Number of years at post:

4. What is your role at the Assembly?

5. What were the main source(s) of funds before the District Assemblies’

Common Fund:

6. What was the total contribution of each source before the inception of the

District Assemblies’ Common Fund?

(i)

7. (a) Is the Assembly still relying on these sources?

(b) If yes, what is the current contribution of each source? What are the

problems associated with these sources?

8. (a) What has been the inflow of Internally Generated Fund over the years?

Year Inflow

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

(b) Reasons for any changes?

What is the district’s share of the District Assemblies’ Common Fund?

Year Amount received

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

9. What is your view about the share of the District Assemblies’ Common Fund

over the years?

10. What do you think should be done about the share of the District Assemblies’

Common Fund?

11. How is the pattern of the release of the District Assemblies’ Common Fund to

the district?

12. (a) How has the sharing pattern affected the Assembly’s Programmes?

Positive Negative Neutral

(b) Explain the impact in (a) above.

13. (a) How has the expenditure pattern being?

Sect

or

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

(b) Basis for changes in the sectorial distribution.

What has been the basis of the distribution?

14. What are the projects implemented through the District Assemblies’ Common

Fund?

Project Location Cost Remarks

15. (a) How are District Assemblies’ District Assemblies’ Common Fund projects

selected?

(b) If selection is done by a committee what is the membership of the

committee?

What are the project selection problems?

16. How do you ensure proper costing of projects?

17. What are the problems faced with project costing?

18. (a) Who approves the selected projects?

(b) How is the approval done?

What is your opinion about the selection process?

(a) Does the Assembly have a Tender Board? Yes No

(b) If yes, what is the composition of the Board?

(c) If no, why?

(a) How are contracts awarded?

(b) Who awards contracts?

19. (a) What are the contract awarding problems?

20. What role does the District Assembly play in the implementation process?

21. What has been the contribution of beneficiaries towards projects?

22. How do you assess the effects of projects on the lives of the people?

23. What are the problems faced with the utilization of the District Assemblies’

Common Fund in the district?

24. What improvements do you want to see in future?

QUESTIONNAIRE FOR ASSEMBLY MEMBERS

1. Name:

2. Locality

3. Before the District Assemblies’ Common Fund, was your locality benefiting

from national resources: Yes No

4. What are some of the development projects undertaken with the District

Assemblies’ Common Fund in your locality:

5. What was the community’s contribution in carrying out these development

6. (a) What has been the impact of these projects on the lives of the people?

Positive Negative Neutral

(b) Explain your answer (the impacts)

7. Is the fund invested in your community adequate? Yes No

8. Do you think there is equitability in the sharing of the Common Fund among

the communities in your district? Yes No

9. What are the projects initiated by the community?

Project Cost Community members’ involvement