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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 FIGURES
FIGURE 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

12
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

13
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.

14
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

15
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

16
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).

17
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)

18
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).

19
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 No. Of No. Of No. Of Total
Education Health Water Sanitation Number of
Projects Projects Projects Projects Projects

Western 88 22 39 108 257

Central 111 37 26 93 267

Greater 36 23 1 20 80
Accra

Volta 135 32 22 87 276

20
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

21
Table 2.2: Allocation of HIPC Fund by functional classification
2002 2003 2004 2005 2006 *

PRIORITY AREAS Amount Prop. Amount Prop. Amount Prop. Amount Prop. Amount Prop.

(¢bn) (%) (¢bn) (%) (¢bn) (%) (¢bn) (%) (¢bn) (%)

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

Human Development 120.84 44.24 396.68 54.19 837.52 44.83 528.54 27.82 344.75 44.29

Services (Education, health, safe water,


sanitation etc)

Private sector development (Agriculture, 63.34 23.19 175.11 23.92 520.59 27.87 802.98 42.26 335.60 43.11
Energy, micro credit, small scale mining,
trade & industry, employment)

Governance (Information, Police, Fire 7.6 2.78 16.23 2.22 208.62 11.17 169.77 8.94 49.00 6.30
Service)

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)

22
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 50%


districts

Need Number of schools, pupil/teacher ratio, number of health 40%


facilities, doctor/population ratio, nurse/population ratio

Responsiveness Improvement in internal revenue collection of the district 5%

Service Population density in the district 5%


pressure

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


Over concentration of development

Decentralization

DACF IGF/Domestic Sources

District wide development

Improved Living Conditions and


Standard of Living

Source: Author’s Construct


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

Donor Grants IGF


11% 14%
GoG Grants
9%
HIPC Funds
17%

DACF
49%

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.
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

180000
160000
140000
120000
100000
80000
60000
40000
20000
0
year year year year year year year
1999 year2000 2001 year2002 2003 2004 2005 2006 2007

Source: Field Survey, 2008


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
30

25
No. of Assembly members

20
Adequacy
15

10 Equitability

0
Yes No
Ans w e rs
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

500000
450000
400000
350000
300000
250000
200000 IGF
150000 DACF
100000
50000
0

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
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 Finish Cost (GH¢)
time time

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 Onyemso 2008 2009 10,000.00


market

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.
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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 199 199 199 199 199 199 200 200 200 200 200 200 200 200
or 4 5 6 7 8 9 0 1 2 3 4 5 6 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