Sunday December 17, 2017
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FORMULA FOR SHARING THE DISTRICT ASSEMBLIES COMMON FUND

1.0 INTRODUCTION

The 1992 constitution, under article 252 and the District Assemblies Common Fund Act, 1993, Act 455, imposes an obligation on the Administrator of the DACF to present to Parliament a Formula for the distribution of monies allocated by Parliament for the District Assemblies every year.

2.0. PRINCIPLES UNDERLYING THE FORMULA

The DACF Formula is developed to allocate the Funds evenly to address the development gaps between the rural and urban districts in the country. The Formula considers the modern concept of development, which sees development as a multi-dimensional process involving not only economic growth, but also improvement in other living conditions such as health, education, access to potable water, good roads, adequate food supply, employment etc, thus defining development in terms of satisfying basic human needs.

In developing the Formula, the DACF office adopted the Basic Needs approach and considered it as a Factor in the Formula with the following as its indicators:

Health Services

Education Services

Water Coverage

Tarred Road Coverage

Under this Factor, those who have more facilities/services receive less to bridge the development gap.

2.1 CHOICE OF INDICATORS AND MEASURES FOR THE FACTORS

Data is collected on selected indicators on the various factors from key public agencies and disaggregated down to the district level. The following indicators and measures are chosen for each of the Factors:

(i) NEED FACTOR

Health Services

This indicator measures the level of health services enjoyed by the people in each MMDA. The selected measures for health services are the number of health facilities such as hospitals, clinics, health centres, Community-Based Health Planning and Service (CHPS) Compound and Health professionals/population ratio.

Education Services

Under this indicator, consideration is given to the number of basic education facilities in each MMDA as well as their Human Resource. The selected measures for this are the number of schools in each MMDA and the trained teacher/ pupil ratio.

Water coverage

This refers to the percentage of population with access to clean and potable water.

Tarred Road Coverage

This indicator considers the total road network in relation to tarred roads in each district.

In addition to the basic needs Factor, the Formula also takes into account three other factors. These are:

i. Responsiveness - this looks at the effort of the Metropolitan, Municipal and District Assemblies (MMDAs) in generating their own revenue.

ii. Service Pressure Factor - this Factor is to cater for the pressures put on facilities as a result of Rural/Urban migration in urban areas.

iii. Equality Factor this is a percentage of the Fund shared equally among the MMDAs before the other factors are applied.

2.2 SOURCES OF DATA USED

Data used in the Formula is obtained from central government sources. This is to avoid the skewing of data to the advantage or disadvantage of any district.

Population

Population data is obtained from the Statistical Service. For the New MMDAs created after the 2010 Population Census, the Population figures for the old MMDAs are shared between the old and new MMDAs.

Education

Data on Education is obtained from the Ministry of Education. Data required includes Education Facilities, Pupil and Trained Teacher Population.

Health

Health Data is supplied by the Ministry of Health. The data supplied includes Health facilities such as Public Hospitals, Clinics, Health Posts and CHPS compounds as well as Doctors and Nurses population. The health sector data poses a challenge because of the fast rate of movement of health personnel and the fact that some health facilities are under Ghana Health Services (GHS) while the missionary health facilities deal with the Christian Health Association of Ghana (CHAG).

Internally Generated Revenue

Local Government Accounts Unit of the Controller and Accountant Generals Department provides data on MMDAs Internal Revenue Collection.

Water Coverage

Data on water coverage is sourced from the Community Water and Sanitation Agency and the Ghana Water Company.

Tarred Road Coverage

Tarred Roads data is obtained from the Departments of Urban and Feeder Roads. Highway data is excluded as most MMDAs have the highways just passing through with little economic benefit to the entire MMDA.

2.3 LOCATION QUOTIENT

Location quotient is the method used to mathematically derive proportions from the data on Needs Factor. It is defined as:

Si/S

Ni/N

Where Si is the number of S” facility in district “I” and S’ is the total number of facility S in the country. Ni is the population of district ‘I’ and N is the population of the country.

The location quotient ranks all the districts in terms of endowment of the facility in question. It is intended that the less endowed districts gain more than the better endowed.

Location quotient is a statistical term used in ranking or locating a District and its existing facilities in relation to the other Districts. The less the existing given facilities, the more the District gains in its share allocation of the Fund in the formula. The location quotient is a mathematical formula used to ensure the equitable distribution of the Fund. This tends to help the more deprived Districts when compared to the better endowed Assemblies in the sharing formula.

2.4 WEIGHTING THE FACTORS

The indicators of the various factors are combined by weights to arrive at the share proportion of each MMDA.

The details of the WEIGHTING OF FACTORS are as follows:

Capping of Operational Expenditure

2.5 The Formula for 2014 has a cap of 10% of total funds allocated to an Assembly as funds that can be used for recurrent expenses. The remaining 90% is for development projects.

3.0 NATIONAL PROGRAMMES

The District Assemblies Common Fund Budget Allocation for 2014 includes allocations to some national development programmes under the Ministry of Local Government and Rural Development. The national programmes include Priority Intervention Programmes and other national programmes. Also a Reserve Fund is allocated to, among others, the Constituency Labour Projects by MPs, the supervisory functions of the Regional Coordinating Councils, RCCs, emergency expenditure and running of the Office of the Administrator. Transfers to these programmes are referred to as Indirect Transfers

The Minister of Local Government and Rural Development and Minister of Finance outlined the following priority and national programmes for 2014.

(a) Priority Intervention Programmes

School Feeding

Sanitation/Waste Management

Sanitation Guards

National Borehole Programme

(b) Other National Programmes

GYEEDA-Sanitation Module

People with Disability

Training

Cured Lepers

(c) The Reserve Fund

i. Constituency Labour Projects

This is to provide funding for Constituency Labour Projects undertaken by Members of Parliament. All the 275 Members of Parliament receive an equal amount to undertake projects in their respective constituencies.

ii. Constituency Labour Monitoring & Evaluation

This is to provide support for Constituency Monitoring and Evaluation by Members of Parliament. All the MPs receive an equal amount.

iii. Regional Co-ordinating Councils

The funds are for the Regional Co-ordinating Councils in their monitoring and supervisory functions of MMDAs in the respective Regions.

iv. Reserve Fund

This is to provide urgent funding for contingency/emergency expenditure.

v. Office of the Administrator District Assemblies

Common Fund

For Operational Support, Monitoring and Evaluation by the

Office of the Administrator

4.0. SEED CAPITAL FOR THE 46 NEWLY CREATED ASSEMBLIES

This amount is allocated to the newly created Assemblies to start-up. It is for the construction of office buildings, purchase of vehicles, etc.

5.0. Direct Transfer

All the funds that do not come under the Indirect Transfer are allocated in accordance with the Formula in paragraph 2 and sent directly to the MMDAs as Direct Transfers