ASSESSING THE CONTRIBUTION OF INTERNALLY GENERATED FUND (IGF) TO THE BEKWAI MUNICIPAL ASSEMBLY DEVELOPMENTAL FRAMEWORK

ABSTRACT
This study that was conducted at the Bekwai Municipal Assembly was meant to explore the Contribution of Internally Generated Fund (IGF) to the MMDAs Development Framework, the case of the Bekwai Municipal Assembly. The study relied mainly on secondary sources of data collated from annual accounts for the period, 2010-2014. Interview was also conducted with the Municipal Finance Officer to ascertain relevant information that would otherwise not be available from the secondary data. The study revealed that the revenue generated internally is lower in proportion to the Central Government Transfers (DACF, DDF and Donor Funds) and targets are mostly not met. The study further showed that the trend of revenue mobilization has witnessed a slow but steady growth throughout the period under consideration and opportunities exist for improvement. Aside the uncooperative attitude of tax payers‘, and difficulty in locating taxable assets and activities, some major challenges included the absence of logistics including a vehicle and the apparent disconnect between the Assembly and the citizenry in respect of tax education. It has therefore being recommended that a common platform beyond fee fixing resolution meetings be created for relevant stakeholders in the revenue mobilization effort. Also the assembly should explore the use of private tax collectors as well as the use of automated tax collection system.


CHAPTER ONE
GENERAL INTRODUCTION
1.1 BACKGROUND
Local Governments (LGs) as an arm of the Central Government was enacted through an act of Parliament Act 462 (1993) to oversee the activities of Metropolitan/ Municipal/District Assemblies (MMDAs) and to provide socio-economic infrastructure to support economic activities within these MMDAs. The goal of Ghana‘s decentralization programme is to bring governance closer to the citizenry. Implementation started in the 1990s where power, authority and resources have been slowly transferred to the Metropolitan/Municipal/District Assemblies. Over the period, the programme has since chalked some successes particularly, citizenry participation in political governance and local level decision making. In spite of this, a major challenge threatening the Metropolitan/Municipal/District Assemblies is the mobilization of revenue and the efficient and effective use of such revenue for development (Macrothink institute, 2013)

There are several constraints on the delivery of these services; amongst others is finance; the generation of revenue and its effective and efficient management. In this regard, the 1992 constitution of the republic of Ghana, and Act 462 (1993) handed Metropolitan/Municipal/District Assemblies (MMDAs) significant financial power to Impose Taxes, Rates, Fees, and Surcharges on the citizenry and businesses within their territorial boundaries to generate revenue to undertake the activities and development of the Assembly.

Revenues can be seen as the life-line of Metropolitan, Municipal and District Assemblies and its effective mobilization will facilitate the meeting of set objectives and goals. On this score internal revenue generation becomes important in the delivery of development projects. Though the revenue (Internally Generated Fund) potential of Assemblies is not tapped to its fullest, it is estimated to contribute substantially to the provisions of basic services and amenities such as health, water and sanitation facilities and educational infrastructure in the local authorities.

This study therefore seeks to assess the contribution of internally generated revenue otherwise called Internally Generated Fund (IGF) to the Metropolitan/Municipal/ District Assemblies Development Framework: focus on the Bekwai Municipal Assembly. The research looks at the tax chain as the basis of comparison of five local taxes. These Taxes are Rates, Lands, Fees and Fines, Licences and Rent. Bird, (2010) has indicated how Local Governments (LGs) financing may appear to be a less significant issue within the National and Local levels. However most of the decisions in the national public sector have little direct effect on the daily life of the citizens. Fiscal Decentralisation is an aspect of decentralisation policy that supports and further streamlines the financial capacity of LGs in the country. It involves four policy issues and these include fiscal regulation, inter-governmental transfers (IGT), revenue, and expenditure (Appiah et al, 2000).

Helmsing (2005) underscores the inability of LGs in sub Saharan Africa ―to define tax rates and service charges and to develop their own tax bases in accordance with their expenditure responsibilities‖. As opined by Smoke (1993) LGs determines the local revenue base. However, Urban LGs have reliable revenue bases than rural LGs. This is further explained by the less developed nature of local economies and their obvious implication for the size and composition of existing revenue base. The industrial activities and private property in developed economies constitute the local revenue base; in contrast Local revenue bases in many developing countries are largely unstable and often depend on agricultural income since collection of property rates, fees and licenses in particular is problematic. This observation was corroborated by Boko, (2005) in a recent study that market taxes constitute an important source of local revenues in many LGs in developing countries. In a related study, Bahl et al, (1984) also indicated that one critical prerequisite for local governments in delivering their mandate to its citizenry is the availability of adequate financial resources. Local governments are tasked with various functions, amongst which is the provision of services to its citizenry.

1.2 PROBLEM STATEMENT
Bekwai Municipal Assembly is one of the orders Assemblies‘ in the Ashanti Region and recently being upgraded to Municipal status. As the case with MMDAs in the country, there exist insufficient capacity, weak monitoring and supervision of revenue mobilization efforts at Bekwai Municipal Assembly. This reduces the Assembly‘s ability over the years to generate revenue internally to complement Central Government Transfers to meet the numerous social and infrastructural demand of its growing population. Although this issue has gained currency as a topical issue, ignited and stimulated discussion on several platforms in recent times, and its potential researched, gaps still exist; hence a study in the trend of internal revenue mobilization in Bekwai Municipal Assembly is imperative.

1.3 AIM AND OBJECTIVES
1.3.1 Aim of the Research
The aim of this study is to explore the Contribution of Internally Generated Fund (IGF) on the MMDAs Development Framework, the case of the Bekwai Municipal Assembly.


1.3.2 Research Objectives
The objectives of the study are classified into general and specific. The general objective is to assess the trend of revenue mobilization and the effectiveness of existing revenue mobilization strategies of the Bekwai Municipal Assembly.

The specific objectives of the study are:
To identify the sources of Internally Generated Funds (IGF) by the Assembly.

To determine the trend of IGF collected by the Assembly in the last five (5) years.

To assess the strategies of mobilizing revenue for the Assembly.

To examine the challenges that impede revenue mobilization in the Municipality

1.4 RESEARCH QUESTIONS
The key research questions that will be expressed for the purpose of the enquiry are:

i.   What are the sources of local revenue generation in Bekwai Municipal Assembly?

ii. What is the trend of local revenue mobilization in the last five years?

iii. What strategies can the Assembly adopt to improve revenue mobilization for development?

iv. What are the challenges confronting revenue mobilization in the Assembly?


1.5 SIGNIFICANCE OF THE STUDY
Sound revenue mobilization by a local authority is a pre – requisite for investment, capital formation and development. Aside generating and increasing revenues, the act of mobilizing internal revenue could as well foster local political and administrative empowerment. Increasing, revenue mobilization remains an important issue for consideration by MMDA‘s in Ghana. The study underscores the trend of revenue mobilization and existing strategies for revenue mobilization and their effectiveness and efficiency.

A critical assessment and understanding of strategies that underpins revenue mobilization in the Bekwai Municipal Assembly will lead to the overall evaluation and assessment of effectiveness of the assemblies‘ strategies for revenue mobilization. Besides, the study would broaden the literature landscape for further studies in revenue mobilization practices in Metropolitan/Municipal/District Assemblies.

1.6 SCOPE OF THE STUDY
This research focuses on Bekwai Municipal Assembly in the Ashanti Region. The Municipal Assembly is chosen because of the evidence of the phenomenon under investigation and the challenges the Assembly is facing in revenue mobilization. The strategic location of the Assembly close to Kumasi coupled with rapid growth in population and economic activities makes the Municipality a better place to study. The study would explore the trend of revenues mobilised, existing strategies, opportunities available for increasing revenue mobilization and challenges.

1.7 RESEARCH METHODOLOGY
The research focuses on revenue mobilization enhancement of Bekwai Municipal Assembly in the Ashanti Region. Both primary and secondary data sources will be employed. Secondary data would largely come from existing revenue data from Bekwai Municipal Assembly. The primary data will be gathered through the administration of structured questionnaires. The rationale behind the use of both data sources is to enable the researcher gain better appreciation of the research findings. The sampling technique to be adopted is the Purposive Sampling Technique. Owing to the specific needs of the study this targeting technique is most appropriate.

1.8 LIMITATIONS
The study is focused on the bekwai municipal assembly. Meanwhile the findings are related to the district assembly frame work hence the findings cannot depict a true picture of internal revenue of all districts.

The use of secondary data and interview of the finance office only makes generalization of the findings problematic, however the nature of the research objectives made it possible for the successful use of secondary data and interviews.

The limited period of the study and resources were also constraining variables. Inspite of these challenges the findings of the research made available some relevant information for further research.

1.9 ORGANIZATION OF THE STUDY
This study is arranged into five chapters. Chapter one is the introductory part of this research. The rest of the study is organised as follows: Chapter two presents review of relevant literature. Chapter three presents the methodology and procedures used to conduct the research. The fourth Chapter analyses and discusses key finding with reference to relevant literature. The fifth chapter contains the summary of the findings, conclusion, and recommendations of the study.

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Item Type: Ghanaian Project Material  |  Attribute: 61 pages  |  Chapters: 1-5
Format: MS Word  |  Price: GH110 ($20)  |  Delivery: Within 30Mins.
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