Increasing Internally Generated Funds through Supervision

Research Paper (undergraduate), 2014

24 Pages














It is God alone that is self sufficient (Quran 31: 13). All others depend on some others for one thing or the other. When one expresses gratitude for what one has, it is likely he would have more to express gratitude for. I therefore want to express my deepest appreciation to all those who contributed in diverse ways to enable me complete this paper.

Research on revenue mobilization in the Wa Municipal Assembly would not have been possible if the Honourable Municipal Chief Executive ( Honourable Issahaku Nuhu Putiaha) and his staff had not responded positively to my letter of consent. I also owe the Member of Parliament for Wa Central (Hon Dr, Alhaj Rashid Hassan Pelpuo) and the former Assembly Man for Bulenga electoral area and presiding member of Wa East District Assembly (Hon Mohammed Saani Seidu) for their financial support.

I am again very grateful to my mentor Dr. Albert Dare (Former Director of Institute of Educational Planning and Administration - University of Cape Coast), for the guidance and encouragement, and also for accepting to edit this work inspite of his busy schedule.

I equally owe my two wives debt of gratitude for their patience and moral support, which continue to urge me on to contribute to the development of society.

I must also acknowledge the kind support of Mr. Mohammed Surajdeen Biligou for his patience and tolerance in helping me to type and print this work.


This study was conducted to assess the effectiveness of supervision in increasing internally generated funds (IGF) of Metropolitan, Municipal and District Assemblies, (MMDAS) in Ghana, with particular reference to the Wa Municipal Assembly.

The purpose or objective was to investigate how much effective supervision would increase internally generated funds in Wa Municipal Assembly of the Upper West Region of Ghana. The key specific objectives of the study were to identify the key sources of revenue for the Wa Municipal Assembly, the specific sources of locally generated revenue; the specific guidelines or by – laws bordering revenue collection in the Municipality; the targets set for revenue collection, and find out whether targets set were met or not; and how people were rewarded or sanctioned for doing their jobs satisfactorily or unsatisfactorily.

It was found that the key sources of revenue to the Wa Municipal Assembly were; the District Assembly common fund (DACF); District Development Fund (DDF); internally generated fund (IGF); Government of Ghana (GOG) and Donor grants.

It was also found that the (IGF) of the Wa Municipal Assembly had been increasing in nominal terms except in 2012 when it dropped from 475, 884.29 in 2011 to 28,423.77 in 2012, which was not directly explained. It was however, noted that the average performance of IGF was 8.44% which was not good enough.

The conclusion drawn from the research was that though the nominal contribution of IGF increased from 2008 to 2014 except in 2012, the average performance was low; especially as compared to the 2012 IGF of Accra Metropolitan Assembly of 49% of total revenue of the Accra Metropolitan Assembly. The Researcher recommended further research into the operations of the revenue collection unit of the Wa Municipal Assembly, using multiple regression analysis to establish the quantitative co – relation between internally generated funds and the explanatory variables of supervision. These are; educational attainment, experience, training and motivation.


The historical development of local government in Ghana dates back to the colonial administration, when the municipal ordinance of 1859 established Municipality in the coastal towns of Gold Coast. This was followed by the 1943 and 1953 ordinances of municipal councils.

After independence, the Local Government Act of 1961, Act54 was passed in an effort to devolve power and authority to the localities in Ghana.In all these pieces of legislation, there were clear distinctions between central and local government institutions in terms of their structural functions.

The local authorities or district assemblies (D/As) perform deliberative, legislative and executive functions. Section 10 of the Local Government Act, 1993, Act 462 states among other things that the district assembly (D/A) “shall formulate programmes and strategies for the effective mobilization and utilization of human, physical, financial and other resources in the district” (National Association of Local Authorities of Ghana (NALAG) Desk diary 2011, p.23).

With dwindling funding from central government, the revenue mobilization function of D/As has become a major issue of concern to government functionaries and development partners.For example, the municipal chief executive for Ejisu Juaben advised revenue collectors in the municipality to desist from condoning and conniving with others to defraud the assembly. He equally urged them to adopt good communication skills and diplomacy to be able to obtain the required tax revenue from tax payers, instead of being abusive, aggressive and insulting to them which would result in reduced revenue to the assembly. This has brought into focus, the need for training and retraining of assembly staff in charge of revenue collection to ensure optimum turnover. Provision of adequate training and effective supervision of revenue collectors by the local authorities are issues of public interest in Ghana.(Graphic on line .com, 12/05/2013).The District Chief Executive for south-Tongu indicated that the ways to enhance revenue mobilization not only require “effective supervision but also tax education, formation of revenue task force and employment of additional revenue collectors” (vibe

Wa Municipal Assembly was created out of the then Wa District in 2004 with a legislative instrument (LI) 1800 as part of the policy decentralization started in 1988. Wa municipality is currently one of the eleven administrative districts that make up the upper west region. “It shares administrative boundaries with Nadowli-Kaleo District Assembly to the North, the Wa East District Assembly to the East and South and Wa West District Assembly to the West and South”. (Wa municipal composite Budget, 2012). The administrative set up of Wa Municipal Assembly comprised the General Assembly and its Secretariat, Departments, 52 Area councils, one urban council and 73 unit committees.

Wa Municipal Assembly is run on daily basis through the Executive Committee. Apart from the executive committee for which the Municipal chief Executive is chairman, the following committees also operate;

- The finance committee
- The works sub-committee
- The social services sub-committee
- The economic development sub-committee
- The justice and security sub-committee
- Complaints and public relations sub-committee

The Wa Municipal Assembly has a total work force of 160, of whom 119 are males and 41females. Out of this number, the work force put directly in revenue mobilization in municipal Assembly is 13, comprising nine males and four females. The internally generated funds “(IGF) contribution to total revenue is 9.4% in 2009, 7.6% in 2010, and 9.9% in 2011 with an average contribution of 8.9%. It is therefore obvious that the Assembly relies heavily on external sources to finance its budgets. The Assembly has a good revenue base and steps including property valuation will be done to improve the situation”. (Wa Municipal Assembly composite Budget, 2012, P.15).

The assembly recognized it has to take a number of steps to improve revenue mobilization, which is laudable, and one can only hope that improvement of supervision will be one of the steps that will be taken to enhance revenue mobilization. This view is supported by Accra Metropolitan Assembly (AMA) (2012) Annual report which indicated that, they were able to manage their internally generated funds consistently from 2010, 2011 and 2012 due to the fact that “the metropolitan Assembly’s revenue mobilization division has been revised to ensure effective revenue collection, supervision as well as monitoring”. (AMA Annual progress report, 2012, p.14).

Article 240 of the 1992 constitution of the Republic of Ghana established the local government system. Paragraphs © and (d) of clause(2) of the said article mandates that © “there shall be established for each local government unit a sound financial base with adequate and reliable sources of revenue and (d) “as far as practicable, persons in the service of local government shall be subject to the effective control of local authorities” (Republic of Ghana Constitution, 1992 (abridged version), p.137)

Since the coming into force of the 1992 Constitution of the Republic of Ghana, and the passage of Act 462, 1993 which is the local government Act, a number of programmes and policies have been undertaken to give meaning and effect to the decentralization agenda the country has embarked on. These include the creation of new and more Metropolitan, Municipal and District Assemblies, the use of Functional Organization Assessment Techniques (FOAT) with its attendant rewards and sanctions, as well as the use of composite budgeting to ensure efficient and effective mobilization of resources.

All the foregoing policies and measures that are put in place are supposed to ensure that District Assemblies put in place effective internal mechanisms including supervision and monitoring, to ensure consistent and sustained increase in internally generated revenue for the development of their areas. However, the extent to which District Assemblies exercise, such effective control’ as provided for by the 1992 constitution of the Republic of Ghana so that the local authorities are able to mobilize adequate and reliable revenue for the development of the District Assemblies is unknown. It is this gap in knowledge about the capacity of the District Assemblies to generate sufficient revenue that this study was designed to fill, using Wa Municipal Assembly as a case study, based on the assumption that effective supervision is an essential aspect of District Assembly capacity to generate revenue.


The purpose of the study was to investigate how much effective supervision would increase internally generated funds in the Wa Municipality of the Upper West Region of Ghana.

The specific objectives of the study were to identify the key sources of revenue for the Wa Municipal Assembly; the specific sources of locally generated revenue;the expenditure pattern of internally generated funds; specific guidelines or by-laws bordering revenue collection in the municipality; specific targets set by the Assembly for revenue collectors; and to find out; whether revenue targets are met or not; how roles are monitored by people in higher authority; how people are rewarded or sanctioned for doing or not doing their jobs.


This chapter covers review of related literature on decentralization; its benefits against a centralized system, resource mobilization, generation of internal revenue by local authorities themselves, effective supervision, and a summary of the chapter which shows where findings converge or diverge.


Insaidoo, K.A (2009, P.103) cited Niccole Machiavelli who wrote in 1513 that “we must bear in mind, then, that there is nothing more difficult and dangerous, or doubtful of success, than an attempt to introduce a new order of things in any state. For the innovator has for enemies all those who derived advantages from the old order of things, whilst those who expect to be benefited by the new institutions will be lukewarm defenders”.

The indifference arises in part from the fear of their adversaries who were favoured by the existing laws, and partly from the incredulity of men who have no faith in anything new that is not the result of well-established experience. Hence, it is that, whenever the opponents of the new order of things have the opportunity to attack it, they will do it with dent of passion, whilst the others defend it but feebly so that it is dangerous to rely on the later (Niccho Machiavelli, 1513 as cited insaidoo, 2009, P.103).

Insaidoo (2009) explained that even as he largely agreed with Niccolo Michiaveli as having made valid pronouncements on policy, he was of the view that the masses must show concern through every legal means to ensure decentralization as a policy succeeds. For anything to succeed, Benjamin Disraifi (as cited inDei-Tumi, 2012, P,) states that there is the need to be ready before the opportunity arrives.

According to Christof (2008) decentralization can be explained as “the transfer of power, responsibilities and finance from central government to sub – national levels of government at provisional and local levels”. Christof intends that decentralization was gaining popularity across the world, especially in the developing world. He indicated that it was gaining an unparallel popularity of 80% of all developing and transition countries undertaking some form of decentralization over the past two decades. This can be explained by reason of the fact that, almost all developed industrialized nations have some form of political, social and economic decentralized institutions” (Insaidoo, 2009.Pg 92).

This is because, if countries realize that, decentralization is a sure way of ensuring rapid development, they will be more than willing to undertake it. While in the view of institute of local government studies (2006) decentralization is supposed to transfer “functions, powers, means (funds) and competence (knowledge)” to Metropolitan /Municipal /District Assemblies from the center in Accra, the institute added that the policy forms basis of local government system which was stipulated by Article 240 of the 1992 constitution and established by Act 462, 1993.

According to Institute of Local Government Studies (2006), the decentralization policy involves among other things the devolution of central administration authority to the District level and “fusion of all the local government system into administrative unit by using the process of institutional integration, manpower absorption, composite budgeting and the provision of funds for the decentralized services, per the following definitions given to policy, one wonders which one of them best explains the decentralization policy”: that policy is either a plan of action for guiding, directing or administrating affairs to achieve set targets”. (Agyeman 1987, as cited in Morgan, 2012,Pg 6 (Unpublished) or simply a course of action (Mankoe,2000 as cited in Morgan 2012 Pg 6). Personally I am of the view that if the decentralization policy not only integrate or even fuse agencies but also sets clear guide lines and specific targets, it will be difficult for the policy to fail.

The structure of local government in Ghana comprised: Regional coordinating council; four – tier Metropolitan Assembly; three tier Municipal/District Assembly; urban, town, area zonal councils; and unit committees. The membership ofthe chief executive; 70 percent of the members who are directly elected by the people living in an electoral area; the members of parliament representing constituencies within the District and not more than 30 percent of members appointed by the president in consultation with traditional authorities and interest groups in the District. (ILGS, 2006 Pg 4 – 7).

The structure of District Assemblies comprised; the general assembly, the executive committee and its sub – committees and the district coordinating council and its technical development while the general assembly is responsible for the deliberative and legislative functions, the executive committee performs its functions directly or through its sub – committees.

The sub – committees mainly refer to the following development planning sub – committee, social services sub – committee, works sub – committee, finance and administration sub – committee, justice and security sub – committee, and the public relations and complaints committee.(ILGS, 2006Mpp. 12 -13).

It is further explained that due to the importance attached to decentralization, the World Bank and International Monetary Fund played significant roles in promoting the decentralization process in Africa and other developing countries (Romeo, 2003; Olowu, 2003; as cited in Ayoaribila, 2013). Ayaribila also stated that “the devolution of power and authority to sub – national units was advocated as a means of overcoming the ineffectiveness associated with the centralized system of governance”. He also indicated that decentralization was generally expected to deliver better service delivery than the centralized system (Chilulo, 2007); Muriisa, 2008 as cited in Ayaribila, (2013). Besides, decentralization is believed to result in the design and implementation of pro-poor policies and programmes that bring out poverty reduction. It is the view of Ayaribila that decentralization has in fact been considered as a pancea to the development challenges in the developing countries at the sub-national level (Ayaribila, 2013, P,2).


Article 240 (2) of the 1992 constitution of the Republic of Ghana states “there shall be established for each local government unit a sound financial base with adequate and reliable sources of revenue” (P. 137). The constitution has also made the foregoing directive enforceable by indicating in Article 240 (2) d. that it shall be the duty of local authorities to effectively exercise control over all persons appointed to serve under them. The constitution has also made possible for people living in the various localities where the local authorities exist or operate to participate directly in their activities to ensure accountability. What all this means is that, when local authorities exercise effective control over personnel under them combined with the active participation of local citizens, district assemblies should particularly be able to generate significant revenue for the development of these localities on consistent basis.

The question one needs to ask is, to what extent are local people living in a local government unit participate in its activities or are involved in its activities?

The tax systems in Anglophone Africa are believed to be characterized by high levels of arbitrariness, coercion and corruption” (Bahiigigwet al .2004 Priehard, 2010, pimhidzai and Fox 2012 as cited in CMI working, 2012, P.7). Bardhan and Mookherjee 2002 as cited in CMI working paper (CMI), 2012) also explained that a complicated and costly non –transparent local government revenue is costly to administer and that it facilitates corruption and according to (CIM, 2012), the main sources of town revenues systems of Anglophone Africa are;

Property rates in urban councils, business licenses, market fees and various user charges, “often in the form of surcharges for services provided by or on behalf of the local government authority”. The CIM working paper pointed out that some of these revenue instruments mentioned are costly to administer especially property tax. It added that property tax is not exploited heavily in Anglophone Africa due to a number of constraints.Bell and Bowman (2006, as cited in CIM, 2012) explained the reasons for its non exploitation as follows

(a) Property markets are not well developed in these countries except Botswana,Namibia and south Africa
(b) Property registers and valuation rolls are often outdated or nonexistent.
(c) Administrative capacity and equipment are often limited.
(d) The tax base is often narrowed by legal exemptions; and
(e) Lack of political support to enforce the property tax, as well as
(f) Political interference in revenue collection. In fact, it was the view of Michael (2002, P.22 as cited in CMI 2012 p.12) that “reasons are considerably more political than economic”. I cannot agree with Michael more as Wa Municipal Assembly appears to lack the political will to enforce property rate in the Municipality.

According to an annual report from the Accra Metropolitan Assembly (AMA, 2012), the various sources of revenue for funding the activities of the assembly were; the District Assembly Common Fund (DACF), Internally Generated Fund (IGF), Government of Ghana (GOG), Donor Grants and HIPC Funds. The report showed that the IGF contributed the highest of 49% to the total revenue for the year. The IGF was closely followed by funds from GOG which contributed 40% of the revenue. The next in importance to the contribution to revenue was the District Assembly CommonFund (DACF).

It was shown that Internally Generated Funds (IGF) inflows had been on steady rise from 2010 to 2012. For example; in 2010, an amount of GH¢12,757,437.26 was collected, which increased to GH¢20,826,883.49 in 2011 and then rose to GH¢22,990,853.81 in 2012. The foregoing increases from 2010 to 2012 summed up to 10.39% increase at the end of December, 2012. It was explained in the annual report of Accra Metropolitan Assembly that the increase of 10.39% was as a result of positive steps the Assembly put in place to raise revenue collection. Some of these positive steps included enforcement of prompt payments and ensuring that revenue collected was lodged into the Assembly’s bank account. (AMA, 2012, P.13)

Recognizing the urgent need to mobilize internal funds to support its development agenda, the Metropolitan Assembly revised its revenue mobilization division to ensure effective revenue collection, supervision as well as monitoring. The AMA (2012) annual report further stated that the activities of revenue contractors were also closely monitored. The report indicated that AMA also adopted a number of strategies to combine with the aforementioned strategies in order to ensure increased revenue mobilization. Furthermore, the assembly implemented the following strategies which were contained in an action plan that was put in place to achieve a target of GH 26 million for the year 2012. Carrying out early distribution of bills; introducing point of sales (POS) Device in collaboration with Sial Global Company, which was to ensure that new scientific method of real time up to date revenue collection was adopted at the market and parks section of the Assembly’s revenue points; collectors were trained on the new POS device by MIS, in which each revenue staff was given a unique identification code and POS machine at the park and market revenue unit.

The system ensured that officials paid all daily revenue collected before the system reset the machine to allow the collector to operate the machine the following day; targets were communicated to all contractors and sub – Metro Directors which was monitored weekly through weekly revenue review meeting with collectors This was to account for performance for the week as well as problems and the way forward; the service of legal team were consulted for property rate defaulters for prosecution by the court; the capturing of new businesses and re – categorization of existing ones was conducted by the budget department of the Assembly in order to update the data base of the Assembly and finally; efforts were made to re – allocate sheds that had more than six months outstanding to new applicants, it is quite obvious from the foregoing that if these strategies were fully implemented, the Assembly would no doubt raise its revenue as it happened from 2010/2012.


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Increasing Internally Generated Funds through Supervision
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increasing, internally, generated, funds, supervision
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Dr. Issahaque Munawaru Munawaru (Author), 2014, Increasing Internally Generated Funds through Supervision, Munich, GRIN Verlag,


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