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Effects Of Decentralization In Ghana

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1. Introduction Decentralisation has been pursued with the aim of bringing governance and development decision-making closer to the ordinary citizen at the sub-national level. The devolution of power, authority and resources to sub-national entities is intended to make governance more responsive to the needs of the people. It is also intended to make governments more accountable to the local people, (Kokor, 2001; Diaw, 1997; Yilmaz, et al, 2008; Ahwoi, 2010). In Ghana Metropolitan, Municipal and District Assemblies (MMDAs) are partners to the Central Government, and as partners they are mandated to mobilize sufficient local government revenue in order to be able to pursue their developmental agenda. The mobilized local government revenue is …show more content…

The DACF is the immediate source of revenue providing a constitutionally stipulated minimum share of government revenue, the ceded revenue deals with a number of lesser tax fields that the Central Government has ceded to the MMDAs. Example of ceded revenue in Ghana are the entertainment fees, casino revenue, betting tax, advertisement and other revenues by the MMDAs are ceded revenues available to the MMDAs (Ayee, …show more content…

According to Kokor and Kroes (2000), the objectives of Ghana’s decentralisation programme is to increase local revenue mobilisation, restructure allocation of resources to meet local needs and empower MMDAs to make allocation decisions at the local level over both locally generated funds and those transferred from the central government. The basic idea of fiscal decentralization is that decentralization of government addresses the problems with allocative inefficiency (Tanzi, 2000) by allowing smaller communities to take responsibility for governance by forcing local governance to be more relevant and more accountable to the community. In the developing world such decentralization has also been initiated to overcome the problems of unemployment and inequity regarding the distribution of income (Baffour, 2008). In furtherance of these objectives, the District Assemblies Common Fund in Ghana was established and has been in operation for over a decade. The allocations to each MMDA are based on a formula approved by Parliament. Disbursements are made on a quarterly basis and a quarter in arrears. The DACF is available to MMDAs only for investment expenditure. In 2008, the proportion of total government revenue allocated to the DACF was reviewed from 5% to 7.5 %. All MMDAs can only receive

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