Structure of district finances and its implications for local based development - a case study of the Bosomtwi-Atwima-Kwanwoma District

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1998-02-22
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The government of Ghana created 110 Assemblies as part of its decentralization policy. These Assemblies are the political decision-makers and implementers at the sub national level. The government has transferred to the Assemblies the power and authority to perform the tasks assigned them. To make the transfer of functions meaningful and efficient the Assemblies have been given the Authority to generate revenue from sources prescribed by law. In addition the government supplements their income with funds from what is commonly referred to as the District Assemblies Common Fund (DACF). Most of the Assemblies derive revenue from other sources such as NGO’s and Bilateral Agencies among others. Despite the provisions made for Assemblies to generate their own revenue and use it at their own discretion, most are not able to generate enough revenue from these sources for which the Bosomtwe-Atwima-Kwaawoma District BAKD) is no exception. In view of this they rely considerably on external funding for their activities. This funding comes with it strings which direct the Assemblies as to how the funds should be utilized. This defeats the essence of the decentralization programme for which local-based decision making is the prime factor. Districts can therefore perform better if they are able to generate much revenue from their own sources. This study was therefore conducted in BAKD in the Ashanti region with the objective of assessing the structure of its revenue and the implication for local based development. It seeks to determine the extent to which the district exercises discretional authority in the use of its revenue and makes appropriate recommendations accordingly. Both qualitative and quantitative data was collected by means of structured questionnaires and discussions with staff of the Assembly and people in some selected settlements of the District. Simple analytical tools such as percentages, trend analysis, measurement of variations and associations and discounting techniques were adopted for the analysis. The work has demonstrated that the district relies so much on the DACF for the implementation of development projects. This fund comes with its guidelines which limits the district in exercising discretional authority in its, spending. Even though revenue from own sources tends to increase in nominal values, it is not enough to meet its recurrent expenditure let alone fund capital projects. This is because the implementation of the DACF projects has expenditure implications and yet the fund is only applicable to development expenditure only. In this respect the Assembly is compelled to follow the guidelines in the utilization of the fund, and this restricts its discretional authority. It would therefore be mutually beneficial if the assembly strengthens its revenue mobilization machinery for which it can have discretionary authority to spend according to its own priorities but within broad Government goals.
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A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirement for the award of the Degree of Master of Science in Development Planning and Management, 1998
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