Fiscal Decentralisation, District Assemblies Common Fund and Local Development in Ghana

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1997-07-07
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One of the key components under decentralisation policy is the devolution of means. In the past, decentralisation policy in many developing countries failed to produce the anticipated impact because the issue of fiscal devolution was not given much attention. In Ghana, it has been realised that the issue of fiscal devolution, among others, is the main cause of local government failure, because the central government had transferred responsibilities to the local governments without the corresponding means. To address this problem, the new decentralisation policy envisioned to transfer means to the local governments. It is against this background that the study was pursued. The study aimed at examining the nature of fiscal decentralisation policy, assesses fiscal resources allocation to the District Assemblies and their impact on local development. To this effect, a cross-section of five District Assemblies selected in Ashanti region were studied focusing on their traditional revenue sources, central government financial transfers to them, the proportions and relationships between these sources of revenue and their impact on local level development. The study showed that there is not much evidence of full devolution of revenue and expenditure. The analytical expositions revealed declining revenue from the traditional sources and increasing dependence on central government transfers by the District Assemblies. This problem has existed in the face of the new decentralisation policy which seeks to transfer power, authority and competence, and means to the District Assemblies. They were also identified as having appreciable degree of fiscal empowerment and with the common fund seeing improvement in basic services. Recommendations, therefore, targeted the strengthening of District Assemblies finances by devolving more lucrative sources of revenue to them and improve the methods used in transferring funds to them. The analytical expositions also unearthed weak financial management which needs to be improved at the local level. It is the view of the author that the adoption of the recommendations made in this report can considerably enhance the design and implementation of fiscal decentralization in the country.
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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 National Development Policy and Planning, 1997
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