Micro/District Economic Development

The status of the District economy is a major determinant of local development. The proportion of economically active population in the Municipality is estimated to be 43% and more than 80% of this active people are engaged in agriculture. The economic activities in the Municipality are agro-based and include farming, agro-processing and trading in foodstuff. 

The Municipality is a major producer of groundnuts and beans in the region. Agro-based industrial activities centre on shea-butter extraction, and rice processing. There are a few small-scale industries such as welding and mechanics shops. Trading especially by women is very important in the Municipality.

District Assembly Financial Capacity

A critical determinant of District development is the financial capacity of the District Assembly. District Assemblies under Sections 94 and 95 of the Local Government Act (462) 1993 have been designated as Rating Authorities with the legislative power to levy and collect taxes on a number of specified items. Over the years, the Gushegu Municipality has exercised this authority by passing a number of bye-laws on revenue collection in the district. 

District Revenue Generation

Generally, the District Assembly has two main sources of revenue, that is locally generated (internal) and Central Government Transfers (External).

Internal revenue sources refer to the potential tax sources that the District levies and collects from within the District. This covers rates and receipts, fees, fines, licenses, rents and dividends /profits from investments.  External revenue sources are grants from the central government, bilateral and multi-lateral agencies and NGOS.  Each of these main sources has a variety of items classified under them.

In order to critically assess how efficient the District has been in the exercise of this function, the financial statement (Revenue and Expenditure) of the Municipality from 1998 to 2001 has been analysed. The revenue generation landscape of District Assemblies all over the country has changed since the introduction of the District Assembly Common Fund (DACF). Prior to the introduction of the (DACF), locally generated revenue accounted for not less than 70% of the total revenue of the assemblies. With the introduction of the DACF, internally generated revenue has accounted far below 50 percent of most District Assemblies.

The Gushegu Municipal Assembly is no exception. In 1998, total Government of Ghana Grant constituting subverted salaries, ceded revenue and common fund was ¢1,198,917,000 representing 96 % of the revenue of the Municipality. Locally generated revenue accounted for only 4 per cent (¢49,961,400) of the revenue of the assembly. Out of this, fees accounted for the bulk (72.3%) of the revenue. Five key revenue items under fees contributed significantly to this. These are export of food stuff from the three markets (39%), market fees (28%), landing fees (13%), export of animals (10%) and livestock (5%). 

District lotto and self-employed artisans license are the major items under license contributing more than 70% to this head. Generally, the total achievement rate of the estimated is 132 %. In spite of the positive total variance, Rates, license and rent recorded negative variances. The 1999 picture is not too different from the 1998 in terms of the proportions of internally generated and external grants. There however seem to be improvement in internally generated revenue. The locally generated revenue increased both in absolute and percentage terms by 6,450,100 and accounted for 8 %, that is, 2 % more than in 1998. Fees still accounted for a substantial part (73%) of the local revenue while rates followed with 19%.

Total achievement rate for the year was 98%, with rates and lands recording positive variances. Ironically, fees, which indeed account for two-thirds of local revenue, license and rent, recorded negative variances. This is not to say that fees have performed badly, especially in the light of realistic budget estimates for the item.

What is significant noting is that in 1998, the DACF received was more than one billion cedis. Yet in 1999 the figure dropped to 614,936,893 that is, 40% less of the previous years. Salaries in 1999 had doubled of the 1998 figure while Ceded Revenue remained almost the same at about 12,000,000 for the period. Revenue from investment has been disappointing, registering only 2% of the estimated.

Fees continue to generate the most revenue for the Municipality for 2000 and 2001. In 2000, fees still accounted for almost 77% (59,478,200) of internally generated revenue, with an increase of over 10,000,000 of the 1999 figure. Incidentally, rates, which also constitute major local revenue sources, did not record any change from the 1999 figure. In 2001 and for the first time in the history of the district, the internally generated revenue reached hundred million cedis. Fees recorded a colossal figure of 88,364,000, That is, about 27,000,000 more than the 2000 figure. 

Rent also made a tremendous increase from the stagnant 10,000 in previous years to 26,749,100 in 2001.  The expenditure pattern of the District Assembly can be grouped into recurrent and capital. Recurrent expenditures are those expenses that are frequent, routine and recurring. These include Salaries and wages, administrative expenses, general expenditure and repairs and maintenance. Capital expenditure covers those that occur once or are one shot activity. These include infrastructure projects such as roads, schools, clinics, residential houses and equipment. Capital expenditure accounts for about 84% while all other recurrent expenditures account for only 16%. Personnel emoluments and administrative cost represent 13% of recurrent expenses. 

The trend of expenditure is the same for 1999 and 2000 with capital expenditure taking a four-fifth of the total expenditure.  There is the need to note that personnel emolument although recurrent is also subverted to the assembly from the government. To be able to measure the financial capacity of the assembly a comparison of the internally generated revenue has been compared with the recurrent expenditures (less salary). In 1998, expenditure exceeded what the Municipality generated by 8,000,000. However in 1999, locally generated revenue exceeded recurrent expenditure by 9, 892,672, while in 2000 and 2001, it exceeded it by 31,544,068 and 26,726,818 respectively. There is therefore sufficient evidence to show that the Municipality has some level of local financial capacity for development. 

In spite of this, there is the need for caution especially when one takes cognizance of the fact that recurrent expenditure in 2000 jumped from 45,121,332 to 95,446,282 in 2001.  The rise is more than double of the previous year’s expenditure and more than the rise in internally generated revenue within the period.