The Effects of the District Assemblies Common Fund on District Assemblies Internally Generated Revenue Mobilisation in Ghana: An Analysis of the Early Years of the Fund

Abstract

The decentralisation system of Ghana requires the transfer of functions to the District Assemblies (DAs). This needs to be accompanied by various type of resources especially funds to ensure its success since District Assemblies are responsible for Ghana’s infrastructural and political development. Financial resource scarcity was common among district authorities which made it more difficult for DAs to carry out their mandated functions. The District Assemblies’ Common Fund (DACF) was introduced to augment the locally generated revenue of DAs. This paper assesses the impact of the DACF on internally-generated revenue (IGR) mobilisation. It seeks to establish the extent to which the introduction of the DACF has influenced local revenue generation of the Bolgatanga, Sissala and Nadowli District Assemblies. In this regard, the discussion covers the legal authority, nature and attributes of the DAs financial resources. The study has established that Central transfers have a dominating importance in the structure of the District Assemblies’ revenue in Ghana. Of the transfers, the DACF constitutes, on the average (for the three districts) 65% of the total income available for the period 1994 –1998. The IGR collection efforts of the three study districts changed in real terms since the inception of the DACF. The huge inflow of central government grants to the District Assemblies has resulted in a reduction in locally-generated revenue and, the high proportion of the DACF contribution to the revenue situation of the three districts implies that all the districts have very weak local revenue mobilisation structures.