Financing local level development: A case study of Agona and Assin district assemblies (1993-1997)

Abstract

This study takes a look at the issue of funding development at the local level. A case study of the Agona and Assin District Assemblies of the Central Region of Ghana in the period 1993-1997 is undertaken to help find solutions to the problem of inadequate funding for local development. The objective of the study was to analyze the system of financing local development, determine the degree of success of the system, establish the basis for the levels of success and propose an improved model of local level development financing. Data was obtained from both primary and secondary sources for the analysis, which was mainly descriptive. The analysis covered the revenues and expenditures of the two District Assemblies. The relationships between revenues and expenditures were also explored. The study found out that while both revenue and expenditure figures fell short of estimated figures at the end of each financial year, the districts assemblies continued to overspend their budgets by diverting resources from the capital budget to finance recurrent items. It was also observed that financial autonomy of the district assemblies was weakening because the assemblies continued to be dependent on central government transfers, especially the District Assemblies Common Fund, to finance their development expenditure due to a decline in raising own-source revenue. The implications of the findings are that attempts at improving local level development financing should consider restructuring local revenue instruments and policies, bringing in additional private investment and improving the budgeting, accounting and financial reporting systems in the district assemblies.