Banking/Financial Services

The District can boast of one Rural Bank and other micro financial Institutions. These are Bosomtwe Rural Bank which has 2 branches with its Head Office at Kuntanase, Garden City Savings and Loans Ltd, Lake View Financial service, Multi Credit Savings and Loans, Eff-Sarf Investment Limited, Lord Winners Micro Finance, Xpress Link Financial Service and Wealth Creation Micro Finance.

Revenue and Expenditure Status

The major sources of revenue to the Assembly are Government grants (DACF, DDF, GoG). Paid Salaries) and internally generated fund (IGF). The IGF is composed of rates, land, fees and fines, licenses, rents, investment and miscellaneous. The contribution of both grants and IGF to the development of the district over the period is shown in table 1.35 below:

 
Grants have been the major source of revenue to the Assembly.  Grants constitute 89 percent of total revenue of the Assembly from 2014 to 2016. However, the contribution of Grant to total revenue has been reducing over the years from 91.5 percent in 2014 to 86 percent in 2016. Whilst the grants have been reducing, the IGF is also increasing. Even though there has been improvement in mobilizing IGF, there is still room for improvement. Government grants continue to be the largest source of revenue to the Assembly. The implication is that without government grants the Assembly cannot undertake major development activities in the district. The bar graph (figure 1.23.) shows the proportion of each source of revenue to the Assembly.

Internally Generated Fund (IGF), 2014-2016

Internally generated fund obtained between 2014- 2016 amounted to GH?1,133,667.8. The highest IGF collected within the period was in the year 2016 when total IGF was GH?544,452.44 whiles 2014 recorded the lowest figure of GH?244,803.11. Rates contributed the highest (GH?345,534.19) to total IGF followed by Fees (GH?327,850.22), Land and Royalties (GH?225,425.11), Rent of Land, Building and Houses (GH?116,590.00), Licences (GH?95,456.00) , Fines, Penalties and Forfeits (GHc18,805.50) with Misc. & Unidentified Revenue being the least contributor to IGF. The Assembly was able to collect only 45.17 percent of its IGF in 2014. 82.73 percent in 2015, whilst 95.15 percent of the total IGF was collected in 2016.

 Grants, 2014-2016

The District received grants from Government and other donors to undertake development programmes and projects. Grants received between 2014 to 2016 were GH?8,054,181.99. The highest amount received by the Assembly in a single year in the form of grants since 2014 was in the year 2016 (GH?2,790,957.21) whiles the lowest figure was in 2015 (GH? 2,613,738.93).  These transfers were in the form of employee compensation, DACF, MPs common fund.

Even though some transfers fell short of the Assembly’s estimates others also exceeded its estimates. In all the years grants fell short of the Assembly’s estimates. In the year 2014, the Assembly received 65.20 percent, in 2015, only 47.52 percent and 2016 only 48.51 was received. Despite the District’s efforts to improve revenue generation, it fell short of its targets for the three years (2014-2016)

 Expenditure (Grants)

Grants received from 2014-2016was spent on compensation, programmes and projects under various sectors. The sectors included Health, Electricity, Education, Roads etc. (See table 1.36)

 Prudent Fiscal Management

Apart from the need to identify other sources of revenue generation in the district and the need to take further control measures to improve the finances of the Assembly, an even more important aspect of financial arrangement is the management of the resources of the Assembly.

Revenue mobilization and its management constitute a core problem area in the district. The limited resources available to the district in the face of numerous demands for development and functions of the Assembly require judicious use of resources of the Assembly and the institution of prudent control mechanisms in order to avoid waste in the system. To this end;

 All funds collected must be fully accounted for and on time too.

* There should be judicious use of funds and for the purpose for which they are appropriated. Expenditures must be made as authorized.

* Monthly financial statements (Trial Balance) must be prepared and issued on time.

* There must be close supervision and inspection of transactions to ensure prompt processing of payment vouchers as well as checking embezzlement of Assembly funds.

* Assembly officials and Assembly members must be honest and accountable to the populace.

* The Assembly must set its priorities right and make judicious use of resources by preparing procurement and cash flow plans for the implementation of programmes and projects.

* The Assembly must invest in productive ventures that will help raise the living conditions of the people in the district.

Apart from grants, the Assembly has not been able to generate enough revenue from its own resources for any meaningful development programmes and projects. This may partly be due to inadequate trained and regular revenue collectors in the district.

 Matching Revenue with Expenditure

The Assembly manages to match actual revenue collected with approved expenditure by:

* Spending within approved budget limits.

* Ensuring proper authorization and approval of all payments.

* Monitoring all payment to ensure that they are being made for budgeted programmes and projects.

* Preparation of monthly trial balance and bank reconciliation statements.

Critically analysing monthly variances of revenue expenditure to find solutions to improve overall performance in revenue collection and expenditures

Appraisal of Current Revenue Mobilization Situation

This section is essentially an audit of the revenue mobilization effort of the DA. It covers billing and collection practices, revenue database of all revenue sources and a review of the revenue section within the organizational set-up of the DA.

The section also examines the condition of revenue facilities, markets, lorry parks, toilets etc.  There is also assessment of the provision of resources for revenue mobilization.

Revenue Database

Basic Revenue Source Data

Data for most revenue sources is inadequate.  Registers for some revenue sources admittedly are available but are not up to date. Consequently forecasting of revenue becomes difficult and in most cases faulty.  The effect is that the DA is unable to put in place an effective rate collection programme thus losing out on maximizing its own source revenue potential.

Valuation List

Valuation has just been done, however it was done to cover only 13 of the 66 communities in the district. There is therefore the need for the identification of properties, which have not been covered in the previous valuation as new buildings are springing up in almost all the communities.  

Electronic Data Processing System

The DA maintains an electronic accounting system. However, the Finance Office does not have adequate electronic gadgets to enhance performance

Revenue Billing/Collection Practices

Revenue Management is a component of the financial administration of the DA.

The regulatory framework and the legal authority are stated in several laws,

- Local Government Law 1993 (Act 462).

- Financial Administration Degree 1979(SMCD 221).

- Financial Administration Regulations, 1979(C 1234).

- Financial Memorandum 1961(sec of Act 54)

- Fee fixing Resolution of the DA.

Besides these, the Ministry of finance and the MLGRD issue directives on financial administration as the where necessary.  All these memoranda and regulations have now been revised and will soon be put into the system for use.

However, the most relevant document for revenue mobilization is the Fee Fixing Resolution which fixes rates to be collected each year.

Fee fixing Resolution

The MLGRD issues guidelines regularly on rates imposition to the DA.  The guidelines set minimum and maximum limits to the rates that the DA is allowed to impose. On receipt of the guidelines, the DA management prepares proposals of rates to be imposed.  Revenue Budget based on the proposed rates are then submitted to the finance committee of the DA for consideration. After review, the proposals are submitted to the Assembly, which rectifies the figures by passing a Fee fixing Resolution.  This then becomes the legal authority for the collection of rates/fees for the budget year.

Billing Systems and Procedures

There appears to be a system for billing.  Bills for property rates are expected to be sent out early in the year. Ratepayers are expected to respond to the notice by settling their bills two weeks after the receipt of the notice.  In practice, however, these bills are not sent out on time nor do the ratepayers respond to them early. With all other rates/fees a General Demand Notice is given out when payment falls due and payment is expected to follow immediately on receipt of the note.  In practice payment follows often several weeks or months in significant number of cases.

There are several weaknesses of the system

- Bills are not promptly issued

- Some bills are not checked before  dispatch/distribution

- Absentee landlords are not available for demand notices to be served on them.

- There exist poor data on properties and other revenue sources for which bills are to be prepared.

  Collection Systems and Procedures

.  The weaknesses noted are the following:

- Cash collections are not lodged promptly

- No safes for safe custody of cash taking at the revenue collection centers

- Poorly staffed revenue section

- No cash in transit insurance

- No transport for revenue collection

- No uniforms for revenue collectors

- Poorly trained revenue collectors

- Apathy/reluctance by ratepayers to pay rates promptly

These problems apart, it is suspected that various forms of leakages are prevalent.  Several forms of the possible leakages include.

a) Desensitization GCR

b) Under declaration of the full load of exports of foodstuffs

c) Non-issue of tickets or issue of  false tickets

d) Use of value books, which do not belong to the DA.

It is suggested that the DA closely monitor revenue collections rigorously to find out whether such malfeasance occurs.

Revenue Monitoring and Control

Revenue monitoring and control is undertaken by several means as follows:

a) Use of value books

b) Bank reconciliation

c) Audit trail

d) Analysis of revenue collections

e) Supervision

a) Use of Value books

The use of value books appears satisfactory.  The books are in safe custody under the control of a senior accounts officer.  They are issued out only when requisitioned by the revenue superintendent.  The risk of theft is therefore minimized substantially.  Moreover it is easy to trail any missing book or ticket. However, issuing of value books should always be done by the District Finance Officer

b) Bank Reconciliation

It appears reconciliation is not done regularly if at all.  Since bank reconciliation helps to determine whether all cash takings re actually paid to the bank, it is an important tool that should be used regularly; it is a serious lapse if it is not done well

c) Audit Trail

A daily audit trail of the previous day’s cash receipts is expected to be conducted by the Auditor.  This must be done daily

d) Analysis of Revenue Performance

The only important monitoring report prepared by the DA is the Trial balance.  The common experience is that this document is usually a month behind schedule.  But the revenue section requires up to date information on the results of its activities.  Analysis of revenue prepared weekly and by value and source is the report which enables the DA to take corrective action in areas where it is not achieving expected results.  This type of report is missing at the DA.  Some of the reports that should be prepared include:

* Daily Revenue Collection by Revenue Type

* Weekly Revenue Collection by Revenue Type

* Monthly Revenue Collection by Revenue Type

* Quarterly Revenue Collection by Revenue Type

* Yearly Revenue Collection by Revenue Type

Additionally it is most useful to prepare comparative reports as follows:

* This Month Revenue compared with last Month

* This Week Revenue compared with last week

* This Quarter Revenue compared with last Quarter

* This Year Revenue compared with last Year

* This Month Revenue compared with same Month Last year

* This Quarter Revenue compared with the same quarter of Last Month

A reorganized revenue section will require this kind of information to enable it plan and manage the revenue function more efficiently

e) Supervision

Supervision at the revenue section required upgrading.  Currently it is barely satisfactory.  The main reason is that the head of the section lacks supervisory skills because he has been exposed to very little training in this area.  He is not very different in orientation, attitude and motivation from the revenue collectors who are under him.  Until the section is upgraded and reorganized, this deficiency in supervision, a common feature of the revenue sections of all DAs, will remain a drawback to effective revenue mobilization.

Organization for Revenue Mobilization

Position of Revenue Section

The revenue section has a lowly status in the set-up of the DA. Unlike a profit oriented business where the marketing department has a high profile because it has the responsibility for sales and income generation, the revenue section in the DA is submerged under the finance department.  There may be historical reasons for this.  For one thing, local revenue generation by erstwhile local councils, the progenitor of the District Assemblies, was not a task to be taken seriously since Government subvention for all its expenditure was a certainty.  The Finance department on the other hand continues to be highly regarded because it is both the custodian and the disburser of the subvention. Treated as an inferior unit of the DA organization, the revenue section can hardly be expected to respond positively to the new challenge of being the instrument for local revenue maximization.

Staff of Revenue Section

The quality of staff of the revenue section is a reflection of the status it is accorded in the DA.  The Revenue Superintendent, the head of the section, is a long service revenue collector who has graduated from the ranks to the position.

As for the revenue collectors, most of them have only basic education, have been in the system for long and in most cases have been given training on the job.  There is very little opportunity for promotion for revenue collectors.  Nor is there any motivation for highflying performance.  Even such ordinary things as uniforms, boots, identity cards, raincoats are not provided; bicycles, motor bikes, are also not given.  With so limited prospect for self-advancement, it is small wonder that the collective contribution by revenue collectors to local revenue generation is either barely satisfactory or poor.

Commission Revenue Collector

There are 18 revenue collectors of the DA, 8 are permanent revenue collectors and 10 are commission agents.  The latter are individuals, some of them barely literate, who collect various rates for a fee of 20% commission.  They operate mostly in the villages where permanent collectors are not available.  A few also operate at the urban centres to support the permanent collectors.  These classes of collectors have two principal disadvantages.  First, a number of them are not sufficiently literate and are unable to keep simple records.  It is not easy therefore keeping track of their collections.   Second, some tend to abandon the work with little or no notice.  This adversely affects the level of rate collection in their areas.  It does appear that his is not a problem for which there can be a quick solution.

Revenue Facilities

Revenue facilities in the district include, markets, public toilets, Lake Bosomtwe.

The markets face several challenges among which include the following:

* No security fence/gate

* No water

* No electricity

* No drains

* Dusty floor, muddy during rainfall

* Poorly maintained refuse dump

* poorly maintained toilet

* Awful unsanitary conditions

Lorry Parks

Various vehicles use the stations.  These include mini buses, large buses an cargo trucks,.  Many traders travel to the markets on these vehicles.

However there are several deficiencies at the parks.  Included among the defects are:

* No security light

* No waiting room for passengers

* No toilet/urinal

* Unpaved surface

* No drains resulting in severe flooding during rains

* Poor sanitation.

Toilet

There are 13 communal/ public toilets in the district: The toilets are poorly managed by unit committees or Assemblymen.  No account is rendered to the DA for fees collected.  There is little or no maintenance of the toilets.  

Resource for Revenue Mobilization

Nearly the DAs including Bosomtwe DA are disappointingly deficient of resources for mobilizing their own revenue.  Some of the resources include such simple and relatively inexpensive items like uniforms, raincoats, boots and identity card.  This DA has no vehicle for revenue collection.  Neither motorbikes nor bicycles have been provided for the revenue section.  Revenue collectors go about their duties on foot all day long.  It is to be remembered that revenue maximization will remain a mirage for as long as the resources for its mobilization are not given the due attention that is deserved.

Rate Payment as a Civic Responsibility

Residents are not aware that rate payment is a civic responsibility. It is the duty of the DA to educate the residents on the need to pay rates as a civic responsibility.  The DA is woefully wanting in this duty and urged the management to wake up to this responsibility.

Information of DA Development Initiatives

There is little information, according to participants, about the activities of the DA.  In particular the DA rarely disseminates news about its programmes and development projects among the general public.  Consequently there is the perception that he DA is doing very little and that revenue from rate payments is misapplied.

Effective Rate Collection Programme

There is the view that the DA has not put into place an effective revenue mobilization plan.  It is suggested that the DA should formulate a more purposeful rate collection initiative.

Supervision of Revenue Collectors

The perception is that revenue collectors are not supervised effectively to motivate them perform efficiently.  The view is that much more revenue can be collected by a revenue team that is more focused than hitherto.

Rate Default

It has been observed that DA does not appear to enforce rate payment regulations, nor is it willing to invoke sanctions for default.  As long as the perception persists, rates can be evaded with impunity; many will be very reluctant to pay the rates that are due.

Inadequacy of Infrastructural/Social Services

Residents bemoaned these services as inadequate.  In particular most of the feeder roads in the district are in a bad shape making it unacceptably expensive to transport foodstuff from the farm to the market.  Access to water is inadequate; they concede, however, that the community water/sanitation project has brought much needed improvement.  Access to electricity is satisfactory; health delivery should be much more widespread across the district, they argued.

Improving Revenue Management System

Billing System and Procedure

* Bills should be issued promptly and at regular intervals of time so as to alert the ratepayer that a particular bill is to be expected at the usual time. It will also help the ratepayer to make provision in his/her personal budget for payment of that bill.

* Bills should be checked for errors before being sent out, thereby removing any doubts about eh accuracy of a bill.

* Bills which have been previously prepared based on old values, particularly in case of property rates, should be thoroughly scrutinized to ensure that current values are taken into consideration.  This will eliminate or reduce offending bulls and t he incidence of angry protests from landlords.

* Efforts must be made to reach absentee landlords by all means.  This is possible through a tenant or some other person who knows him, or by post.

* A reliable data on all revenue sources is the one sure way of preparing bills to exploit the full potential of every revenue source.  The ultimate solution lies in a computerized billing system based on a computerized database.  As far as possible, therefore, the billing system should be computerized for efficiency and effectiveness.

* Assembly must institute special for a where information and education will be the focus to explain to the public, the Assembly’s achievements i.e. plans, processes, progress, prospects and problems, to encourage payers to pay rates willingly on demand.

* All rate defaulters must be promptly prosecuted (see LG Act 1993 Act 462 Sec. 101).  The procedure of making Byelaws takes unduly long time.  The other law enforcement agencies such as the Police and Judiciary should be contracted to offer their support in this area.

Collection Systems and Procedures

* Cash collections should be paid to the cashier and/or lodged promptly into DA bank account.

* The possibility of depositing the day’s cash takings overnight with the bank for safe keeping should be explored.

* Small safes should be installed at revenue centers.

* Insurance should be provided for cash in –transit.

* Collectors should easily record their daily collections. The document should be submitted together with returns on cash payments.

* The Revenue Section to be reorganized and the position of the head to be upgraded to attract qualified people into senior positions of the proposed department.

* Design training programmes for the revenue collectors to upgrade their efficiency and effectiveness.

* Revenue collectors should be provided with uniform and protective clothing and identity tags.

* Annual award scheme for the most efficient and effective collector(s) should be institutionalized.

* Since revenue is the mainstay of the Assembly, means of transport must always be made available for mobilization and field monitoring.

* Erect revenues barriers at appropriate points for ease of collecting export fees.

* Spacious and well-furnished offices should be provided for all zonal offices.

* Encourage privatized collection especially by identifiable groups.

* Provide warehouses for the big markets where necessary.

* Cede more revenue items for collection, especially those that are cited at obscure places.

* A sustained ratepayer-awareness campaign should be vigorously embarked upon to educate and inform ratepayers about all matters concerning rate payment.  In this regard the assistance of churches, Civil Society Groups, NGOS, traditional rulers, Trade Association. NCCE can be solicited to reach as many people as possible.

* Projects undertaken with DA revenue should be widely publicized.  This will also improve the district’s relation with the ratepayers.

Economic Resources

The District is endowed with a variety of potential economic resources which when properly harnessed can create much wealth for the people and to improve their standard of living. The range of economic resources in the district include; arable and viable agricultural land, tourist attractions, plantation and cash crops, good roads linking the district to the regional capital and other districts, electricity coverage, some cottage industries made up of palm oil and palm kernel extractions, gari processing, weaving and others, market centres dotted in the district, hotel and restaurants, and a pool of businesses like traders, business houses

 Inter Trade

This is the trade that goes on between Bosomtwe District and other adjoining districts and those beyond. By its location the district shares boundaries with about four districts and there is an inter trade between Bosomtwe District and some of these districts. For example, there is trade between the people in the district and districts like Bekwai Municipal, Ejisu Municipal Assembly, Asokwa Municipal Assembly and Kumasi.

Goods traded in are either exogenous ones or endogenous ones. The exogenous goods are those goods that move from the frontiers of Bosomtwe District to other districts. Such goods are basically agricultural produce like plantain, palm nuts, peas, mangoes, oranges, cabbage, lettuce and others.

The endogenous goods on the other hand are those goods that move from other adjoining districts into Bosomtwe District. For example, goods like manufactured goods are brought into the district on market days from Kumasi, Ejisu, and Bekwai.

Intra Trade

This refers to trade that goes on among the market centres (communities) within the district. For example, on market days (Tuesdays) at Aputuoagya, Thursdays at Kuntanase and  Fridays at Jachie people from other towns like Beposo, Amakom, Abono, Esereso, Feyiase, Pramso, Tetrefu and others travel to Aputuogya, Kuntanase and Jachie towns to trade.  Goods traded in are basically food and other agricultural produce and some manufactured items and clothing.

Employment Status

The employment status by sex of persons aged fifteen years and older is shown in table 4.5. As shown in the table 1.37, data on employment status indicate that majority (64.6%) of the economically active population are self-employed without employees. Employees constitute 18.4 percent, while contributing family workers is made up of 5.4 percent. Self-employed with employees on the other hand, is represented by 5.1 percent of the economically active population.

 Key Development Problems of Unemployment and Under-employment

• Non-availability of job opportunities;
• Lack of employable skills
• Farming/agriculture being unattractive to the youth; and
• Inadequate vocational and technical institutions in the District

To solve the problem of unemployment and underemployment, the under listed interventions would be put in place by the District Assembly and its development partners. These interventions would include:

• Providing skill training for the unemployed youth and linking them to financial institutions to access start-up capital
• Supporting the youth in apprenticeship training.

Implications to Development

• Poverty reduction, Particularly among farmer groups
• Higher productivity
• Employment creation
• Improved marketing approach through FBO linkages