The Deputy Finance Minister, Ato Forson has described as “worrisome” the over-reliance of Metropolitan, Municipal and District Assemblies (MMDAs) on central government transfers, saying it was a challenge that needed to be tackled holistically.
He expressed concern about the low mobilization of internally generated funds (IGF) by the Assemblies and noted that it was unacceptable that IGF formed only 20 per cent of the total funds of MMDAs.
Mr Forson was addressing the opening of the Southern Zonal Conference on “Strategic Guidelines to Optimize Internally Generated Funds in Ghana in Cape Coast.
It was on the theme “Maximizing Internally Generated Revenue Potentials for Improved Local Level Service Delivery.”
Participants of the two-day conference were drawn from MMDAs, public sector institutions like the Ghana Revenue Authority, parliamentarians, development partners and local government practitioners from the Greater Accra, Western, Central, Eastern and Volta regions.
Activities would include presentations, group work sessions, plenary sessions on various IGF topics which would be validated at the national validation conference to be held later in the year.
The Minister indicated that government acknowledged that transfers were necessary to finance the gap in resource requirement of MMDAs but it should not replace IGFs and that it was incumbent on the MMDAs to improve on their revenue performance to complement the effort of Government.
He said government was aware that the IGF was plagued with structural, administrative and systemic inefficiencies which undermined the ability of the MMDAs to optimize opportunities to fully realize revenues available to them.
He revealed there were plans to re-engineer the process and develop appropriate measures to address them adding that the measures would empower the MMDAs to manage not just the collection of local revenues but the effective utilization of such revenues; adding that the Ministry of Finance was in the process of deploying GIFMIS to all MMDAs, which would require all MMDAs to process all transactions related to IGF on the GIFMIS platform.
This, he explained, would enhance the efficiency and comprehensiveness of their financial transactions and improve compliance with the Financial Administration Regulations.
Mr Forson disclosed that within the last two years, government had undertaken series of important steps to establish a predictable and transparent fiscal framework for the MMDAs in order to strengthen their capacity to undertake their functions .
He added that the review of the inter-governmental fiscal framework, the implementation of the composite budget and the introduction of the Ghana Integrated Financial Management System (GIFMIS) and Programme Based Budgeting were all efforts towards improving the accountability and effectiveness of Assemblies.
According to him, fiscal decentralization as a means of achieving local development was based on economic efficiency and improved local revenue mobilization; and that internally revenue generation capacity was therefore a key component of an effective fiscal framework for local government.
He revealed that internally generated revenues accounted averagely for about only 15 to 20 per cent of all MMDA revenues, and said it was an implication that Central Government transfers and other donor grants averagely constituted about 80 per cent of the backbone of local Government finance.
He therefore urged all MMDAs to up their game in IGF mobilization.
The Outgoing Central Regional Minster, Dr Samuel Sarpong noted that even though Ghana had made progress with decentralization, fiscal decentralization which involved the effective mobilization and judicious use of funds needed critical attention.
He explained that the nation could not develop as expected if the MMDAs relied on external fiscal inflows from government and developing partners.
He said there was the need for recommendations which would inform the development of a comprehensive national IGF strategy to improve on revenue generations.
Dr Sarpong acknowledged the effort made by the two ministries in addressing the structural, systematic and administrative challenges confronting the IGF landscape and the local revenue operations of the MMDAs; and urged participants to offer ideas from their rich backgrounds and experiences to build a better nation.
Source: GNA