The Administrator of the District Assemblies Common Fund (DACF), Michael Yamson, has proposed a constitutional amendment to guarantee that Metropolitan, Municipal and District Assemblies (MMDAs) retain at least 75 percent of the revenue they generate internally. He made the proposal at a public forum in Accra as discussions on fiscal decentralisation and local government financing gain renewed attention.
Mr Yamson said constitutionalising the minimum retention rate would give assemblies greater financial independence, strengthen long-term planning and reduce their reliance on transfers from central government.
He also proposed a district-owned revenue mobilisation compact that would require assemblies to achieve at least 15 percent annual growth in internally generated revenue as a condition for accessing their full allocation from the DACF.
Yamson Seeks Constitutional Protection for IGF
According to Mr Yamson, MMDAs currently retain 100 percent of their Internally Generated Funds (IGF), but the arrangement is based on government policy and administrative convention rather than an explicit provision in the 1992 Constitution.
He said the absence of constitutional protection means a future administration could reverse the policy without the need for a constitutional amendment, potentially creating uncertainty for assemblies that depend on internally generated revenue to plan and deliver services.
Yamson described the existing arrangement as “real but revocable by whichever administration decides otherwise tomorrow.” He argued that establishing a constitutional minimum of 75 percent would provide assemblies with a guaranteed share of their locally generated revenue while creating a more permanent foundation for fiscal decentralisation.
In his view, constitutional protection would signal that decentralisation is not merely a policy preference but an established principle of governance backed by law.
He further argued that a constitutional guarantee could expand the legal definition of what qualifies as local revenue, giving MMDAs greater confidence to invest in revenue mobilisation systems and other mechanisms capable of improving their internally generated resources.
Revenue Mobilisation Compact to Link Performance
Beyond the proposed constitutional amendment, Mr Yamson introduced a district-owned revenue mobilisation compact designed to balance greater financial autonomy with accountability.
Under the proposed compact, each assembly would be required to achieve a minimum 15 percent annual growth in locally generated revenue. Meeting the target would become a condition for accessing the full allocation from the DACF.
Mr Yamson said the arrangement would ensure that greater control over local revenue comes with a corresponding responsibility to improve collection. The proposal is intended to discourage excessive dependence on DACF transfers while encouraging assemblies to identify new sources of revenue and improve existing collection systems.
The approach would also introduce a performance-based element into local government financing, requiring assemblies to demonstrate continuous improvement in their ability to mobilise resources locally.
Fiscal Constraints Continue to Affect MMDAs
The proposal comes amid longstanding concerns about the financial capacity of Ghana’s local government institutions. For years, decentralisation advocates and experts have argued that MMDAs lack sufficient fiscal space to perform their responsibilities effectively because they depend heavily on central government transfers, which can sometimes be delayed.
Yamson told the forum that development at the district level suffers when assemblies cannot accurately determine the resources available to them for planning and implementation. He argued that a constitutional guarantee would reduce the risk that a change in government policy could remove a significant source of funding for local authorities.
He also maintained that many assemblies could raise substantially more revenue if they were assured that investments in revenue mobilisation would be protected from future policy reversals.
According to the proposal, some assemblies are currently reluctant to invest heavily in revenue collection infrastructure because of uncertainty over whether future administrations could change the policy governing their use of internally generated funds.
75% Floor Intended to Protect Existing Benefits
Mr Yamson stressed that the proposed 75 percent constitutional floor should not be interpreted as an attempt to reduce the 100 percent IGF retention currently enjoyed by assemblies. Rather, he said the proposal seeks to establish a constitutionally protected minimum while allowing the existing policy arrangement to continue where applicable.
“The 100 percent they enjoy now is a matter of policy; what is being proposed is to write a guarantee into our constitution as this compact widens what counts as local revenue”.
Administrator of the District Assemblies Common Fund (DACF), Michael Yamson
The distinction is central to the proposal because the constitutional amendment would guarantee a minimum retention rate rather than permanently fixing the proportion at 75 percent. Mr Yamson argued that this would give assemblies a level of certainty while allowing the broader local revenue framework to evolve.
Yamson acknowledged that the proposed revenue mobilisation compact could create challenges for assemblies with weaker revenue bases or limited administrative capacity. He said the compact would therefore be implemented with technical support from the Ministry of Local Government and the DACF Secretariat.
The proposed support would include capacity-building programmes, digital revenue collection systems and performance monitoring tools designed to help weaker assemblies improve their revenue mobilisation capacity.
The measures are intended to ensure that the performance requirement does not disadvantage assemblies that currently lack the systems, personnel or infrastructure required to meet the proposed annual growth target.
Yamson said the broader objective is to create a system in which greater local financial autonomy is matched by stronger revenue performance and accountability.
Proposal Requires Parliamentary Approval
The DACF Administrator acknowledged that constitutionalising the proposed IGF retention rate would require broad consultation and parliamentary approval.
He nevertheless argued that the potential benefits justify the process, particularly if the amendment can institutionalise fiscal decentralisation and strengthen the financial position of local government authorities.
The proposal is expected to feed into broader discussions on constitutional reform and decentralisation in Ghana, where advocates have repeatedly called for clearer responsibilities and stronger financial resources for local government.
If adopted, the amendment could significantly alter the framework for local government financing by giving MMDAs a constitutionally protected share of their internally generated revenue.
A stronger fiscal foundation could improve the ability of assemblies to plan and finance projects while supporting service delivery in areas such as roads, markets, sanitation and other basic local services.
DACF Secretariat to Engage Stakeholders
The DACF Secretariat is expected to engage Parliament, the Ministry of Finance and civil society organisations as consultations on the proposal progress. Yamson indicated that a draft framework would be developed to guide implementation if the proposed constitutional amendment gains sufficient support.
The consultations are expected to determine how the proposed 75 percent retention floor and 15 percent annual revenue growth requirement could be incorporated into Ghana’s local government financing framework.
The proposal has therefore placed local fiscal autonomy firmly back on the national agenda, particularly as Ghana continues to debate how best to strengthen decentralisation. For MMDAs, the central issue is the distinction between a policy that can be changed by an administration and a financial entitlement protected by the Constitution.
Whether Yamson’s proposal eventually becomes law will depend on political support, parliamentary processes and public consultation. If successful, it could provide assemblies with greater certainty over their internally generated revenue while linking increased financial autonomy to measurable improvements in local revenue mobilisation.
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