Metropolitan, Municipal and District Assemblies (MMDAs) continue to face challenges in delivering essential development plans as a result of delays and partial disbursement of requisite entitlements/funds- District Assemblies Common Fund (DACF), according to the Africa Centre for Energy Policy.
While decentralization is acknowledged as a preferred development framework that could propel the country’s economic development, MMDAs in Ghana have yet to perform up to half of this goal since their establishment. This is due to several bottlenecks that impede their ability to deliver on their development plans.
Furthermore, the disbursements also suffer from top tier deductions due to the application of some legislative frameworks such as the Earmarked Funds Capping and Realignment Act, 2017 (Act 947). These deductions have huge impacts on funds disbursed to MMDAs to deliver on development plans, especially in the education and health sectors.
As a consequence, ACEP indicates that the introduction of laws and policies to absorb part of the DACF at the national level suppresses actual disbursement to MMDAs.
Recommendations for MMDAs and Government to avert challenges
To reverse this situation and ensure that these challenges aforementioned are dealt with, it recommends that the DACF be excluded from the Earmarked Funds Capping and Realignment Act and further legislation that serve as hindrances to the fund.
The passage of laws from time to time that are aimed at reassigning portions of the DACF reduce the amount of revenue available to MMDAs, thus making it difficult to fund local development.
Similarly, Government’s disbursement of the funds to MMDAs should be timely in order to prevent delays and cost overruns on project execution at the local level, ACEP indicates.
Fundamentally, the government is required by law to allocate at least 5 per cent of national revenue to the District Assemblies Common Fund (DACF) for the purpose of broadening the financial capacities of Metropolitan, Municipal and District Assemblies (MMDAs) in financing developmental projects.
According to ACEP, it is advisable that MMDAs have the capacity to track and validate disbursements of the DACF allocated to them. This is because, such a feat will help MMDAs identify the challenge to revenue generation and further demand Government’s action to meet its funding responsibilities.
Revenue Potential of the DACF
The District Assembly Common Fund is an essential revenue source for Metropolitan Municipal District Assemblies since other primary income-generating sources such as Internally Generated Funds (IGFs) are scanty. Such limited funds are as a result of low economic activities and weak revenue collection efforts by the MMDAs.
More so, the DACF contributes more than 40 per cent of MMDAs total revenue and constitutes the major source of funding for development projects in the local communities in Ghana.
Essentially, the education and health sectors are important fundamentals to economic growth at the local level and therefore require significant investments from MMDAs. Albeit, these sectors face huge challenges which include inadequate access to teaching and learning materials, high pupil to teacher ratios, inadequate health infrastructure and high patient to doctor ratios.
Putting the overarching objective of MMDAs in contributing to the development of local communities in Ghana at the fore will require a relook at the challenges in government’s disbursement of the DACF.
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