An Associate Professor of the Department of Economics at the University of Ghana (UG), Professor Eric Osei-Assibey, has stressed the need for metropolitan, municipal and district assemblies (MMDAs) to be strengthened to intensify revenue mobilisation to fund their own developmental projects, instead of depending on central government’s funding.
He said that would be a significant step to overcome the cyclical challenge of the government spending beyond its planned expenditure, leading to wide fiscal deficits as a result of meeting infrastructural demands by the citizens during election years.
Speaking at the GRAPHIC BUSINESS/Stanbic Bank Breakfast Meeting in Accra yesterday, Prof. Osei-Assibey said the government needed to put more premium on fiscal decentralisation in order to address the situation.
“Our elections are often characterised by fiscal pressures by citizens because we have not put enough premium on fiscal decentralisation and so in every election year you often see district assemblies and communities putting pressure on the government.
“This is also because we have not been able to help them to build enough capacity to be able to mobilise resources at the local level to meet their developmental needs.
“Revenue collection has been the bane of the country in recent times and in many cases when you look at our expenditure, you will realise the inefficiencies,” he said.
Prof. Osei-Assibey explained that the key reason “why the country often runs into the cyclical fluctuation of spending beyond its planned expenditure has been the government’s inability to collect enough revenue for development”.
He said that was the reason the local economic system needed to be decentralised and strengthened for many of those problems to be curbed.
That, he said, would enable the local authorities to provide basic amenities and for the government to also eye bigger projects to address the issue of citizens holding the government to ransom every election year.
“If the local tax system is efficient, you will see that during elections people will not be looking at the central government to provide certain basic amenities at that level.
“Government expenditure is really not a problem but rather a stimulus for the economy.
“The people are expectant of getting development projects because we have huge infrastructure deficit and so the government has an obligation to spend,” he added.
His views were corroborated by the Executive Director of the Institute for Democratic Governance (IDEG), Dr Emmanuel Akwetey, who asked for more powers for the MMDAs, indicating that the competence of those institutions needed to be strengthened.
“Not only do we need fiscal decentralisation; we also need administrative decentralisation to be able to strengthen the competence of these MMDAs to support the development agenda.
“Our institutions are extremely weak, we have not invested in developing them and as a result they lack the competences to use the little resources generated,” he added.
Based on a research conducted by the IDEG, he noted that local economic development in Ghana for the last 27 years had not been successful.
He also said the country did not have the maturity to use the few resources it had generated over the years efficiently.
For instance, he said, the District Assemblies Common Fund (DACF) “does not get to the districts when expected”.
“Now the assemblies are even telling us that they have to pay for the central government’s cost and expenditure. For example, when the President is on a tour in their localities, they need to pay for that expenditure,” he added.
The breakfast meeting, which is an initiative of the GCGL and Stanbic Bank, is a series of dialogues that feature selected topics with the aim of influencing government policies in favour of businesses.
It brought together players in the private sector, policy makers and people from the government to deliberate on how the country could learn lessons from the past to avoid a huge budget deficit in 2020.
It was on the theme: “Election cycles, democratic governance and fiscal stability: Lessons for Ghana”.