In jurisdictions, where there are clear distinctions of authority between sub-national and national agents, decentralised entities of government rely scarcely on the central government for funding. Sub-national entities are encouraged to raise own source revenues and invest them to fund the provision of services and to grow the local economy. In effect, depending on the institutional arrangements of a country, decentralized entities can enjoy significant autonomy which is a key ingredient for local innovation and experimentation.

In Ghana, the sub-national level constitutes the metropolitan, municipal and district assemblies (MMDAs). These classifications are done based on the size of the population. The MMDA’s are responsible for coordinating and implementing development projects and programmes at the sub-national level. Although the central government provides subventions (intergovernmental grants) to the MMDAs through the District Assembly Common Fund (DACF), they are also encouraged to generate funds within their respective jurisdictions to augment the subventions from the state. Even though the MMDAs have some form of autonomy with respect to their expenditure, there are sectoral institutions (Ministries, Departments and Agencies-MDAs) which are mandated by law to have oversight responsibilities. For instance, the National Development Planning Commission (NDPC) which is mandated to develop a Medium Term National Development Plan (MTNDP) for the whole country oversees the development plans prepared by the MMDAs (Medium Term Development Plans- MTDP). This is to ensure development coordination and policy coherency from the national to the sub-national level.

Accordingly, the MTDPs of MMDAs have accompanying budgets which specify the allocation of resources to programmes in what is referred to as the Composite Budget (CB).  The CB adopts a programme-based budgeting process and format, and it is anchored on five thematic areas; management and administration, social services delivery, infrastructure delivery and management, economic development and environmental management.  In a typical MMDA CB, parameters such as expected revenue and allocations would find expression in all the development programmes prepared by the MMDA for an administrative year (January-December). The MTDPs of MMDAs usually run for a period of 4 years capturing the development plans of the district. The MMDAs rely on the MTDPs of their respective districts to prepare the Annual Action Plans (AAPs) which capture the intended development plans likely to be executed by MMDAs in an administrative year. Significantly, the AAPs and CB become the two key documents that express the development ideas and financial plans of an MMDA for an administrative year.

Besides, the existence of a CB which is derived from an AAP, expressing expected revenues and expenditure does not in any way constitute an actual development but only intended activities. As per the social contract which exists between citizens, government and its representatives of which the MMDAs are key, the provision of social services cannot be overlooked. Social service delivery constitutes reforms in critical areas such as education, health, social protection and employment. In Ghana, these services are categorised into education, youth and sports services, public health services and management, social welfare and community development, environmental health and sanitation services and birth and death registration services. Consequently, MMDAs are not bound by any law to have thresholds in the allocation of resources towards the delivery of social services. Planning officers of MMDAs are to prepare MTDPs in consultation with the District Planning Coordinating Unit (DPCU). However, to improve allocations towards the delivery of social services, the work of Budget Analysts (BAs) with respect to the CB cannot be overlooked. This is key to ensuring that social services are given priority in the whole development coordination programme at the sub-national.  

Ghana continues to progressively alleviate poverty despite limited resources. Governments overarching goal in the social sector is to a considerable extent to lessen the socio-economic burden on the poor and vulnerable. When minimal resources are allocated to the social sector, it is more likely that the inequality gap will be widened, further pushing the poor down the poverty line. Besides, the MMDAs who represent government in their catchment areas have a responsibility towards the marginalized, vulnerable and socially excluded. The design and execution of social services at the sub-national level for the greater good especially for Persons with Disabilities (PWDs), Women and Children cannot be overemphasized.

The CB of MMDAs by law is expected to express the expected revenue and expenditure items towards development for a particular fiscal year (January-December). The revenue component of the budget takes into consideration the DACF provided by the central government, internally generated funds (IGF), fees and commissions as well as support from the donor community. The budget also captures the programmes the MMDA intends to execute for the reference year based on the four year MTDP of the MMDA. Programmes in the budget could cover issues such as climate change, education, health, economic development, security, agriculture and transport. Consequently, the issues of social service delivery cannot be excluded.

However, when it comes to the expenditure on social services, the allocation of resources towards certain line items has become problematic. Audited expenditure budgets of MMDAs have shown that in most cases, resources are considerably spent on logistical arrangements rather than on the proposed social intervention. In such situations, it becomes challenging to measure the impact of social interventions from a budgeting perspective.

Again, audited financial statements of MMDAs have shown that with respect to the CB, the variance between the expected and the actuals on both the revenue and expenditure sides raises the critical issue of budget credibility for social services. When the credibility of the CB is brought into question year after year, it casts doubts on the reliability of MTDPs, AAPs and the intended goal of reducing poverty and inequality through social spending by respective MMDAs.

As the central government continues to support the MMDAs through the DACF, local authorities must ensure that they strictly adhere to budget lines captured in the CB. Unfortunately, the picture painted in the 2022 Auditor General’s Report (AGR) on the management and utilisation of DACF concerning the irregularities in the use of funds by MMDAs is one of many wrongs. This arises because in most cases, the subvention (grant) provided by the central government is delayed and hence MMDAs are not able to access and utilise the funds for the intended purposes. Eventually, when they are able to access the DACF, certain programme timelines would have elapsed and the original intent naturally would have been forgone. Such funds are then directed towards other line items. The lack of availability and accessibility of funds greatly hinders the delivery of social services at the local level. The overall negative impact is felt hardest by poor and vulnerable groups who need such social safety programmes to remain afloat.

To draw the curtain, the concept of local governance is here to stay, and successive governments must begin to prioritise subnational development. This will be a critical step towards bringing development closer to the citizens. Central and local governments are encouraged to develop homegrown strategies that will build the financial muscle of the latter to provide the needed social services in their respective areas not forgetting the accountability mechanisms that must be inherent in local public financial management processes. This will be a step towards ensuring budget credibility and policy coherency at the subnational level. In the grand scheme of things, an efficient social service delivery system will help lessen the burden on the poor and vulnerable as we work towards an era of just transition.

By Otoo, Kirk Kuuku  (Public Policy Analyst) &  Kemeh Mavis (Planning and Budgeting Advisor)