Municipal Economy

 Structure of the Municipal Economy

Agriculture is the main stay of the municipal economy engaging over 58% of the active labour force. The commercial sector is also improving in the municipality engaging about 21.5% of the population with the service sector trailing behind with about 11%. One of the least sectors in the municipality is the industrial sector employing about 9.5% of the active working population. The sector is dominated mainly by small scale industrialists comprising agro processors, carpenters, weavers and mechanics.    

Household Income and Expenditure

The distribution of household incomes varies in relation to location as in urban or rural and employment status. Studies show that 88% of households receive monthly income in the range of 20 to 200 Ghana cedis with the remaining 12% receiving income above 200 Ghana cedis. The difference in the income pattern can be attributed to the fact that, a total of 58% percent of the active labour force is engaged in the agriculture sector which is mainly subsistence in nature.

Households’ monthly expenditure has thus been patterned by the nature of the household’s monthly income as a result of the correlation between income and expenditure. Households’ monthly spending on the various expenditure items (education, health etc) is within the range of 1 to 200 Ghana cedis while other essentaials including water and food are between 1 to 50 Ghana Cedis.

Households Expenditure Patterns

Households in the municipality spend their incomes on a variety of items and activities. The main components of household expenditure are food, clothing, education, transportation, rent, funerals, health and housing construction. Others are donations, energy requirements, mobile phone units, credit repayment and taxes repayment. Expenditure analysis indicates that a greater proportion of the household income is spent on food accounting for 35% of household expenses. All households also spent on food purchases indicating that even in remote rural communities, subsistence farming is gradually dwindling and this can be attributed to the destruction of farmlands for galamsey.

 Levels of Poverty

According to the Ghana Living Standard Survey, Round Six 2013 (GLSS 6 – 2013), the upper poverty line (absolute) in Ghana is GH¢ 1,314.00 per year and GH¢ 3.60 per day whilst the lower (food) poverty line (extreme) is also GH¢792.05 per year and GH¢ 2.17 per day. The over all poverty index of the country is therefore GH¢ 3.60 per day. The poverty rate in Ghana is 24.2% and extreme poverty rate is 8.4%. The overall poverty in Ghana decreased by 7.7% from the year 2005/06 and 2012/13. However the incidence of poverty increased from 7.5% to 9.3% in Eastern Region of which Abuakwa North Municipality is part, over the same period.

Poverty decreased by 1.9% in the urban areas, while it decreased in the rural areas by 5.8%. The Gini coefficient in the Eastern Region is 0.38. The East Akim municipality of which Abuakwa North formed a part, was ranked 6th in terms of wellbeing in the region.  Calculations from the Lorenz curve put income disparity at 0.38 or 38%. This indicates that poverty levels in the municipality are high and further steps should be taken to reduce current poverty levels in the municipality.

Employment

About 80% of the total active labour force is engaged in economic activities whilst the remaining 20% are unemployed. Majority of the working population are in the agricultural sector which is practiced at subsistence level. Hence the income level of the work force is low. Agriculture employs about 58% of the total labour force.

The commercial sector is also improving in the municipality engaging about 21.5% of the population with the service sector trailing behind with about 11%. One of the least sectors in the municipality is the industrial sector employing about 9.5% of the active working population. The sector is dominated mainly by small scale industrialists comprising carpenters, weavers and mechanics.      

About 97% of the entrepreneurs finance their businesses from their own sources. This constitutes a serious setback to expansion of the enterprises. Entrepreneurs also face the problem of transportation of produce to market centres especially furniture which tends to be bulky and thus difficult to handle.

Employment Status

Employment status refers to the status of a person in the establishment where he/she currently works or previously worked. Eight employment status categories were provided: employee, self-employed without employees, self-employed with employees, casual worker, contributing family worker, apprentice, domestic employee (house help). Persons who could not be classified under any of the above categories were classified as “other”.

The 2010 Census shows the population 15 years and older by employment status and sex. It was observed that 66.4 percent of the employed population is self-employed without employees emphasizing the dominance of sole proprietorship in the municipality, whereas employees constitute about a fifth (19.8%) and 13.2 percent are contributing family workers.

For the sexes, the proportion of females employed population that belongs to self-employed without employees’ category is higher compared to that of males (73.8% against 58.5%). The least proportion (0.4%) of females and male population are contributing family workers as shown in Fig. 1.13.

Employment Sector

This refers to the sector in which a person works. The employment sectors covered in the 2010 PHC include public formal, private formal, private informal, semi-public/parastatal, NGOs and international organizations.

Figure 1.14 shows the distribution of persons 15 years and older by employment sector and sex. The figure indicates that 85.0 percent of the employed population in the municipality are engaged in the private informal sector. This is complemented by the public (government) sector engaging a tenth of the employed population. Less than one per cent of employed population either work for NGOs (0.2%) or other international organizations.

A similar pattern is observed for the sexes, with male employed population in the various sector higher compared to their female counterpart, except in the private informal sector where female employ population dominate (89.8% against 79.4%). The large percentage of private informal operators makes the municipal economy largely informal in nature. Measures such as financial and technical support for such individuals will go along way to make them productive.

Financial sector.

Financial sector one main commercial bank and 3 rural banks. The only commercial bank is the GCB Bank at Tafo. There are a number of insurance services located mainly at Tafo, the business district of the municipality. records available indicate a high percentage (65%) of the municipal population is non-banked. this is partly due to lack of innovation on the part of the banks in attracting operators in the informal sector. table 1.19 shows the banks and their locations in the Municipal.

Markets

The main market center in the Municipality is Tafo with Osiem contributing occasional market days. The Municipality cannot boast of any modern market center even though efforts are being made to upgrade the Tafo market to such a level. To promote trading activities and revenue generation, the Assembly will continue to invest in providing market structures to attract large patronage from nearby towns.

Commodity Export

The municipality engages in the exchange of goods and services within and outside the municipality. The types of goods that flow within and outside the municipality are classified in agricultural and industrial goods. Tafo, Kukurantumi and Osiem are the major market centres in the municipality which serve as a commercial hub in the area and thus attract a large quantity of goods. These centres however lack market facilities and patronage. Thus it is imperative to develop the market infrastructure in these centres to take advantage of the vast business opportunities. Table 1.19 shows the outward and inward commodity flow and economic linkages with other MMDAs.

Local Economic Development

The UN Habitat defines Local Economic Development (LED) as a participatory process where local people from all sectors work together to stimulate local commercial activity resulting in a resilient and sustainable economy. LED is seen as a tool to help create decent jobs and improve the quality of life for everyone, including the poor and marginalized. The municipal assembly has over the years put in place practical measures to foster this agenda through the provision and rehabilitation of critical infrastructure such as roads, electricity, water and markets. In this vein, the Assembly will create the enabling environment for the private sector to set up agro-processing factories and other industrial set-ups. Construction of the Tafo market and rehabilitation of roads will also be high on the agenda for local economic development.

Revenue and Expenditure Status

Sources of Revenue

Sources of the Assembly’s revenues are classified under internal (i.e. revenues generated by the Assembly from within) and external (i.e. those revenues coming from governmental/donor sources). Internal sources of revenue include rates and receipts (basic rate, property rate), lands (share of stool lands, sale of buildings permits and mining), fees and fines (courts fines, market tolls, lorry park, artisans, marriage/divorce etc), licenses (local breweries, lotteries, millers, traders/bakers, kiosks, restaurants, etc), rent (assembly houses, market stalls), interests on investments. External revenue includes those mainly from grants-in-aid (ceded revenue, DACF, DDF, and other GoG Transfers etc). Since the Assembly is only a few months in existences, revenue and expenditure assessment will be deferred to the end of 2018.