Effects of District Assemblies Common Fund on revenue mobilisation and expenditure patterns in the District Assemblies

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The current decentralisation policy was introduced in 1988 under the PNDCL 207, principally to address the imbalances in development between rural and urban areas of the country. The whole concept of the decentralisation policy is grounded on the idea of popular participation in the decision making process. The policy saw the establishment of one hundred and ten districts. Within the framework of the policy, each district capital is expected to serve as a focal point for socio economic development of the entire district. Central government has therefore made available several sources of revenue to the district assemblies. The statutory basis for the district assemblies’ revenues is provided for under Acts of parliament including the 1992 constitution (sections 245 - 252), the Local Government Act 462 of 1993 and the District Assembly Common Fund Act 455, also of 1993. The introduction of the DACF has had some effects on the activities of the district assemblies. The aim of this study is to establish, empirically, the effects of the DACF on revenue mobilisation and expenditure patterns in the district assemblies. Amansie East and Atwima districts in Ashanti Region were randomly selected for the study. Revenue and expenditure data were collected from the sample districts to facilitate quantitative analysis of the study. Results of the study show that after the introduction of the DACF, there has been an increase in total local revenue arising mainly from lands and investment income. However, there has been a reduction in income from some important traditional sources such as rates and licences. The study also indicates that the DACF has necessitated an increase in capital / development expenditure over recurrent expenditure with greater proportion of the capital / development expenditure directed at social sector development. It was also observed that with the increasing demand for social and economic facilities or infrastructure from almost every town or village, available revenues to the district assemblies are inadequate. It was therefore recommended that the central government should increase the DACF while district assemblies also intensify their revenue mobilisation effort.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfilment of the requirements for the degree of Master of Science in National Development Policy and Planning