CHAPTER ONE

INTRODUCTION

Background to the Study

The Local Government Act, 936, (2016) enjoins all Metropolitan Municipal and District
Assemblies (MMDAs), not only to provide various services, but also to improve the standards of
living of the people, who are regarded as the owners of the Assembly. Metropolitan Municipal
and District Assemblies (MMDAs) are not able to sponsor local growth curricula with revenue
created in their area of jurisdiction because of the absence of investment principal at the local
level (Acheampong & Fosu, 2021). The organization and generation of income at the local
assemblies are undertaken by means of the blue-collar methods making it problematic to follow
the improvement of the MMDAs in the part of income generation (Yeboah, 2020).

The numerous demands by many of the people living in the local communities place the
Assemblies at critical positions to generate and mobilize adequate resources to ensure that each
community have a fair share of national cake and development agenda. Such developmental
agenda include the provision of potable water, good road network, sanitation and infrastructural
projects. Legislative instruments give backing to District Assemblies to levy taxes and other
charges on people within the district to generate enough revenue for development, and to
undertake the functions for which they are established. Local Government Act, 936, (2016)

Revenue mobilization has been considered, as the first element of success in the 21st-century
economy. Kalogiannidis (2021) argue that, the higher the revenue of the government; then it will
be convenient to create capital for the activities and additional expenditures against such a
development process, which includes its infrastructure, health, and education. The primary
objective of the tax system is to raise the revenue that will aid in offering the nation with
valuable services to the citizens, developing the nation, encouraging innovations and trade. The
strengthening of the revenue mobilization in the developing countries is advisable, as it helps to
build better taxation. As most of the countries are arising from the economic crisis, they require
extra revenue from their taxation policies as well. According to Popoola et al. (2018), to
accomplish developing goals, domestic revenues are substantial, especially in low-income
nations. There is a need for infrastructure in such countries and environmental challenges Most
of the countries have enhanced their domestic revenue mobilization in order to strengthen their
efforts and situations. The objective of the imposition was to compel the countries towards
economic growth.

Development is a sine qua non for modern civilization. In a crusade and struggle to carryout
development at all nooks and crannies of the society. The Local Government as the tier of
government that is nearest to the people is saddled with the responsibility of direct development
of the people to a certain level. Development is highly associated with fund, much revenue is
needed to plan, execute and maintain infrastructures and facilities at the local government level.
The needed revenue is generated for such developmental projects in this tier of government. Like
construction of accessible roads, building of public schools, health care centers, construction of
bridges among others are solely carried out from income generated from taxes, royalties,
haulages, fines and grants from states, national and international governments.

Thus, the Local government cannot embark, execute and possibly carryout the maintenance of
these projects and other responsibilities without adequate revenue generation. This is the basic
reason why development is skeletal at some Local Government Assembly in Ghana (Agbe et al,
2017). The poor revenue generation has however, pronouncedly affected development negatively
in many Local Government assemblies in Ghana with the attendant consequences of not being
able to bring the much-needed development.

Indeed, the central government has exhibited significant commitment to decentralization,

especially with the adoption of the Local Government Act 2016 (Act 936). Ghana’s initialization
effort was initiated to facilitate broader citizenship participation in the governance of the
development process. According to Act 936, the primary objectives of decentralization and
therefore the establishment of the MMDAs are to:

 Transfer political, economic and social power to the local people to enable them handle
local priority;
 Creating democratic environment and institution in Ghana for government and
development at the local level, which facilitates the participation of the grassroots in
decision making;
  Improve accountability and effectiveness by bringing the political and administrative
controls and services to the community where they are delivered;
 Empower local communities and local officials and to free them from constraints
imposed by the central government
 Provide a clear link between payment of taxes and service provision;
 Empower the assemblies to plan, budget, finance and provide services to their residents
and mobilize the mass of the people in the area for socio-economic development at the
local level. (Local Government Act 2016, (Act 936).

The MMDAs are the nearest government to the people at the grassroots level in Ghana. They are
strategically located to play a pivotal role in national development. Since they are responsible for
the governance of a large mass of the population of Ghana. Ghartey et al (2020), stated that
MMDAs are in a vantage position to articulate the needs of the majority of the people and
formulate strategies for their realization. To be effective partners in development, Acts 936
requires the Assemblies to generate sufficient revenue locally to supplement allocation from the
central government. The 1992 constitution, the District Assemblies Common Fund Act 2016
(Act 936) and the Local Government Act (Act 936) makes provision for the central government
to distribute funds from the District Assemblies Common Fund (DACF) to MMDAs. This moves
Ghartey and Quansah (2020) to state that Assemblies are empowered enough to by the Act 936
to raise internal revenue. Statutory provisions empower the MMDAs to devise appropriate
methods to mobilize revenue and put in place measures to prevent non- compliance and revenue
leakages. The District Assemblies system of Governance requires adequate funding to enable the
numerous developmental activities within their jurisdictions. Tetteh (2018) argued that, because
Assemblies are responsible for their people within their districts, it is necessary to investigate the
needs of those people and design a strategy so that those needs could be realized.

Statement of the Problem

Despite statutory grant provisions and other forms of financial support from the center of
government, MMDAs are unable to produce enough local revenue to finance development. To
sustain local developmental activities, they mainly rely on the District Assemblies Common
Fund (DACF), which was transferred by the central government. Particularly for central
governments, the low level of income mobilization coupled with improper use of funds by local
authorities has been a cause of concern. Realizing that income shortfalls impede growth,
MMDAs are given the authority to implement a number of methods to increase local revenue
mobilization. the following are potential tactics;

 A new rate for landed property.

 Reasonable rate and payment level increases.
 The creation of an ad hoc task group on revenue to guarantee revenue payments are
enforced.
 Strengthening of education and revenue mobilization campaigns.

Despite these methods, the issue of low revenue production among MMDAs, particularly Shai-
Osudoku District Assembly (SODA), persists.

The MMDAs have enough legal authority to raise local funds for development. Local
administrations in Ghana are unable to develop efficient plans to raise enough money locally,
despite their legal standing. Instead, they rely primarily on financial assistance from the federal
government. As a result, SODA

 Its IGFs are primarily used to pay administrative costs.

 It has experienced revenue shortfalls over the years.
 It over-relies on the DACF, which is woefully inadequate for capital projects.
 Its waste management is subpar, and it is unable to offer other municipal services to the
residents of the metropolis.

Despite the fact that SODA has been given enough authority to organize IGFs and develop new
service goods in order to raise the standard of living in the metropolis's populace. The Assembly
is unable to create brand-new methods for raising money or even improve upon its current ones.
Instead, it frequently relies on the DACF, which is insufficient and out of the ordinary on its
own.

Purpose of the Study

Generally, the study aims at evaluating the effectiveness of revenue mobilization strategies
adopted by Shai Osudoku District Assembly (SODA).

Research Objectives
The study's overarching goal or objective is to assess the efficiency of revenue mobilization
tactics in MMDAs, particularly Shai-Osudoku District Assembly (SODA). The following are
particular objectives or goals that must be met:

 To identify the processes for effective Revenue Mobilization at SODA.

 To assess the strategies for effective revenue mobilization by SODA.
 To examine the challenges associated with revenue mobilization in SODA.
 To determine whether SODA has the ability to create fresh revenue-generation plans to
boost revenue generation.
 To ascertain the effect of low IGFs on urban development.

Research Questions

The following questions, requiring the acceptable answers, were posed in order to meet the
study's objectives:

 How is SODA generating IGFs? What tactics are they using?

 Can SODA come up with innovative methods for raising money?
 What are the processes for effective revenue mobilization at SODA?
 How does the growth of the metropolis respond to low IGF levels?
 What are the challenges affecting the effective revenue mobilization at SODA?

Significance of the Study

There is an urgent need for specific procedures to measure the performance of MMDAs, notably
SODA, after more than ten years of introduction and implementation of fiscal decentralization in
Ghana. For SODA to build effective systems to not only generate revenue but also manage it
wisely for development, impartial research to examine or evaluate the Assembly's performance
on the Internal Generated Funds is necessary.

Additionally, the study's importance is as follows:

 It would make the federal government more aware of the difficulties the MMDAs are
having in mobilizing due to employee dishonesty at MMDAS during their growth
process.
  It will reveal the root cause of ineffective income mobilization.
 It will alert SODA management to the issues, particularly in cases where the suggestion
is being considered for adoption.

Limitation

The study was associated with several limitations which made it more challenging just like every
other study. These limitations are;

 All of Ghana's assemblies were not able to be included in this study. Only SODA was
the subject of the study out of several Assemblies in the nation. This was a result of the
short amount of time in the academic year that was available to carry out this
investigation.
 The difficulty in obtaining data from the assembly, since some of the staff were
unwilling to share ‘confidential’ information.
 It was very difficult merging class exercises with the research work.
 The lack of sufficient funding prevented further, in-depth research on the tactics
Ghanaian MMDAs used to raise revenue.

Due to the Assembly's ineffective use of its authority granted by the Local Government Act 936
(2016) to efficiently generate sufficient IGFS for the physical development of the city, the study
is only focused on SODA. There are not enough areas and structures for tracks, craftspeople, and
individuals taking varied vacations to accommodate their size. Due to these, people dislike the
Assembly and its central administration.

Delimitation

The purpose of the research is to evaluate the Shai-Osudoku District Assembly's (SODA)
capacity to generate revenue.

The study focused on the strategies used by MMDAs in revenue mobilization. The study area is
limited to the administrative jurisdiction of Shai Osudoku District Assembly and the revenue
collectors, rate payers and staff involved are given within SODA jurisdiction.

The unit of analysis for this study consist of the selected staff with key roles in revenue
mobilization, selected revenue collectors and rate payers. Secondary data for the study will be
sourced from the District Assembly’s financial reports. Again, the study will evaluate the
behavioral dynamics of individuals involved.

Definition of Terms of the Study

SODA: Shai-Osudoku District Assembly

DACF: District Assemblies Common Fund

MMDAs: Metropolitan, Municipal and District Assemblies

IGFs: Internal Generated Funds

Revenue: Is the yield of sources of income (such as taxes) that a political unit (such as a nation
or state) collects and receives into the treasury for public use

Legislative instruments: It is a Public Act or an instrument made under a Public Act.

Decentralization: It is the transfer of control of an activity or organization to several local

offices or authorities rather than one single one.

Socio-Economic: Is relating to or concerned with the interaction of social and economic factors.

Budget: It is an estimate of income and expenditure for a set period of time.

Jurisdiction: A jurisdiction is a state or other area in which a particular court and system of laws
has authority.

Grassroots: It is the most basic level of an activity or organization or within the district.

Organization of the Study

The research paper is organized into five main chapters. Chapter one contains the background of
the study, the statement and identification of the problem, purpose of the study, objectives of the
study, research questions, the significance of the study, limitations and delimitation of the study
and definition of terms.

Chapter two discusses the literature reviews for the study. This is in the area of decentralization
and local government revenue mobilization and explains the concepts of revenue mobilization
and the strategies required and their relationship to project planning and implementation.
Chapter three discusses the research methodology and defines what the activity of research is,
how to proceed, how to measure progress, and what constitutes success. As well as the
techniques for data collection processing, sources of data (primary and secondary) as well as
description of the mode of data analysis.

Chapter four discusses the findings of the research which resulted from analysis of data
collected. This was done through presentation of the output of data analysis.

Chapter Five provides a summary of the research made by the researcher and presents major
conclusions emanating from the study as well as recommendations made and finally gives room
for further study and research on the topic.