Fiscal Decentralization and Autonomy of Subnational Entities in Ghana

Abstract

English: This thesis examines the implementation of fiscal decentralization in Ghana, originally known as the Gold Coast in West Africa. It focuses on the Government of Ghana’s policies regarding subnational entities especially those related to own-source revenues, property taxes and government fragmentation. Ghana began the implementation of fiscal decentralization during the colonial era, but commenced more rigorous reforms only after 1988, with the enactment of laws to implement a Constitutional provision to allocate 5 percent of tax revenues to subnational governments and to fragment growing subnational units to smaller ones, in order to aid service delivery. The effectiveness of these polices has not yet been assessed by the Government of Ghana. This thesis examines these policies by posing three questions: First, “how effective is fiscal decentralization in supporting subnational autonomy in Ghana?” Second, “To what extent do revenue and expenditure assignments as well as intergovernmental transfers impact on regional gross domestic product in Ghana?” Third, “to what extent do subnational fragmentation and intergovernmental transfers impact on own-source revenue and more specifically property tax revenue in assemblies in Ghana?” The thesis concludes that Ghana has been more successful with political and administrative decentralization relative to fiscal decentralization. Of the pillars of fiscal decentralization, the intergovernmental transfers pillar is the most effective, although its implementation is bedeviled with delays in the transfer of funds. Revenue and expenditure autonomy are limited in Ghana, partly because of financial capacity constraints at the local level and over the financing of their capital budgets. It also concludes that subnational debt is not a challenge in Ghana. However, fragmentation at the regional and assembly levels has an overall negative impact on regional GDP, own-source revenue generally and property taxes more specifically, with some nuance at the level of metropolitan assemblies. Finally, this study confirms that intergovernmental transfers have an aggregate negative impact on own-sourced revenue, but no impact on the property taxes. I therefore recommend a detailed analysis of the institutional capacity of assemblies to generate own source revenue to be carried out before assemblies are fragmented. In addition, the central government needs to progressively increase the performance-based proportion of its intergovernmental transfers and provide technical assistance to assemblies that require support to enhance their revenue collection.

Sepedi: Thesese ye e lekola phethagatšo ya go se beye taolo ya ditšhelete lefelong le tee ka Ghana, yeo mathomong e bego e tsebja bjalo ka Gold Coast ka Bodikela bja Afrika. E nepiša go melawana ya Mmušo wa Ghana mabapi le dihlongwa tša mmušo kudukudu tšeo di amanago le tše di itirelago letseno, metšhelo ya dithoto le makala a mmušo. Ghana e thomišitše ka go se beye taolo ya ditšhelete lefelong le tee nakong ya bokoloniale, eupša e thomišitše dipeakanyoleswa tšeo di tseneletšego kudu fela ka morago ga 1988, ka go tsenya tirišong ga melao go phethagatša tlhagišo ya Molaotheo ka nepo ya go aba dipersente tše 5 tša letseno la motšhelo go makala a mmušo le go aroganya dikarolo tše di golago tša mmušo go tše nnyane, ka nepo ya go thuša kabo ya ditirelo. Go šoma gabotse ga melawana ye ga se gwa hlwa go sekasekwa ke Mmušo wa Ghana. Thesese ye e lekola melawana ye ka go botšiša dipotšišo tše tharo: Ya mathomo, "naa go se beye taolo ya ditšhelete lefelong le tee go šoma gabotse bjang go thekgeng ga boikemo ga makala a mmušo ka Ghana?" Ya bobedi, "naa le peo ya ditshenyegelo gammogo le diphetišetšo tša ditšhelete ka makaleng a mmušo go ama bjang palomoka ya letseno la ka dileteng tša Ghana?" Sa boraro, "naa karoganyo ya makala a mmušo le diphetišetšo tša ditšhelete ka makaleng a mmušo go ama bja go itirela letseno le kudukudu go letseno la motšhelo wa dithoto ka dikopanyong ka Ghana?" Thesese e fetša ka gore Ghana e atlegile kudu ka go se beye taolo ya tša sepolotiki le tshepedišo lefelong le tee ge go bapetšwa le go se beye taolo ya ditšhelete lefelong le tee. Go dikokwane tša go se beye taolo ya ditšhelete lefelong le tee, kokwane ya diphetišetšo go makala a ka gare ga mmušo ke mokgwa wo o šomago gabotse kudu, le ge e le gore phethagatšo ya ona e senyeletšwa ke dititelego ka diphetišetšong tša ditšhelete. Boikemo go letseno le go tshenyegelo ke bjo bonnyane ka Ghana, bonnyane ka lebaka la mathata a bokgoni bja ditšhelete maemong a selegae le mabapi le go thekga ditekanyetšo tša yona tša letlotlo. Gape e fetša ka gore sekoloto sa ka makaleng a mmušo ga se tlhohlo ka Ghana. Le ge go le bjale, karoganyo ka maemong a ka dileteng le a kopanyong e na le seabe sa kakaretšo sa go se kgahliše go GDP (Palomoka ya Letseno la ka Nageng) ya ka seleteng, go go itirela letseno ka kakaretšo le go metšhelo ya dithoto kudukudu, fao go nago le mathata ka maemong a makaleng a ditoropokgolo. Mafelelong, dinyakišišo tše di tiišetša gore diphetišetšo tša ka makaleng a mmušo di na le seabe sa go se loke ka kakaretšo go go itirela letseno, eupša ga di na le seabe go metšhelo ya dithoto. Ka fao ke šišinya gore go dirwe tshekatsheko ka botlalo ya bokgoni bja go tšweletša letseno la tšona bja dihlongwa pele ga ge makala ao a kopantšwego a ka aroganywa. Godimo ga fao, mmušo wa bogareng o hloka gore o oketše kudu karolo ye e theilwego go phethagatšo ye kaone ya mošomo ya diphetišetšo go makala a mmušo le go aba thušo ya sethekniki go makala ao a kopantšwego ao a nyakago thekgo go matlafatša kgoboketšo ya ona ya letseno.

Afrikaans: Hierdie proefskrif ondersoek hierdie beleide deur drie vrae te stel. Eerstens, "Hoe doeltreffend is fiskale desentralisasie in die ondersteuning van subnasionale outonomie in Ghana?" Tweedens, "In watter mate beïnvloed inkomste- en uitgawetoewysings sowel as interregeringsoordragte die streek se bruto binnelandse produk in Ghana?" Derdens, "In watter mate beïnvloed subnasionale fragmentasie en interregeringsoordragte eiebroninkomste en, meer spesifiek, eiendomsbelastinginkomste in rade in Ghana?" Die proefskrif kom tot die gevolgtrekking dat Ghana meer suksesvol was met politieke en administratiewe desentralisasie in verhouding tot fiskale desentralisasie. Van die pilare van fiskale desentralisasie is die interregeringsoordragpilaar die doeltreffendste, hoewel die implementering daarvan belemmer word deur vertragings in die oordrag van fondse. Inkomste- en uitgawe-outonomie is beperk in Ghana, deels as gevolg van finansiëlekapasiteitsbeperkings op plaaslike vlak en oor die finansiering van hul kapitaalbegrotings.